Citizen’s Advice Bureau launches super-complaint over £4bn consumer rip-off
The Citizens Advice Bureau will today lodge a super-complaint with the Competition and Markets Authority (CMA) over what it believes to be a £4bn annual loss to UK consumers.
The claim sits across mobile, broadband, home insurance, mortgages and savings over the so-called loyalty penalty, which is the difference between what loyal and new customers pay for the same service.
This is the fourth super-complaint to be made by CAB since the new powers came into effect in 2002.
"It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal. As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam," said Citizens Advice chief executive Gillian Guy.
Read more: How to avoid paying the loyalty penalty on your mortgage
Research carried out by Citizens Advice found that British consumers lose a total of £4.1bn per year to the loyalty penalty, at an average of £877 per person per year. Additionally, eight in 10 people are paying a significant premium in at least one of the five markets by remaining with their current supplier.
Trade body UK Finance responded to the news to say it will “carefully consider” the issues raised in the complaint, but that customers are always encouraged to shop around for the best deal.
"Regulators and government have recognised the loyalty penalty as a problem for a long time – yet the lack of any meaningful progress makes this super-complaint inevitable," added Guy.
"The government’s price cap in the energy market will protect some loyal customers. However, there’s still a long way to go in other sectors."
Andrew Bailey, chief executive of the FCA, said it would work closely with the CMA on investigating the super-complaint.
“We expect firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing," he said. "It is important to get the balance right so that existing customers do not miss out on the benefits of competition and innovation, including when they purchase or renew their general insurance products.
“The general insurance market study we have announced today will help us examine the issues we have already identified in the market in more detail.”