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Citizens Advice has welcomed the CMA’s response to their super-complaint on the loyalty penalty.

19 Rhagfyr 2018

Gillian Guy, Chief Executive of Citizens Advice, said:

“This is a strong response from the CMA, recognising that loyal customers are getting ripped off. That is exactly why we’ve been fighting to stop the loyalty penalty, and why we made the super-complaint.

“The CMA is clear that nothing should be off the table when it comes to tackling the loyalty penalty, including targeted price caps, so we're expecting bold action.

“While the CMA needs to hold regulators to account, the onus is now on Ofcom and the FCA to act. The CMA has set a 6-month deadline for progress and expectations are high. Regulators must do whatever it takes to fix the loyalty penalty in the mobile, broadband, insurance, savings and mortgage markets.

“As the CMA has recommended, where regulators lack the powers to address this problem the government should introduce legislation to fill the gaps - ideally in the next Queen’s Speech.

"The loyalty penalty costs customers £11 million every day. The government and regulators need to show they're on the side of consumers by taking urgent action to end this systematic scam."

BACKGROUND:

Citizens Advice submitted the super-complaint to the CMA in September 2018 calling for the regulator to consider how the problem can be fixed.

Research by Citizens Advice found that across 5 essential markets (mobile, broadband, home insurance, mortgages and savings):

  • British consumers lose £4.1 billion a year to the loyalty penalty (or £11 million a day).

  • 8 in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

  • The loyalty penalty is, on average, £877 per year - equal to 3% of the average household’s total annual expenditure.

This is the fourth super-complaint Citizens Advice has made since being given the power in 2002. Its complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £33.3 billion returned to customers in refunds and compensation so far.

Notes to editors

  1. Citizens Advice includes the national charity; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
  2. Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.
  3. The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.
  4. Citizens Advice offers Pension Wise services at 500 locations in England and Wales.
  5. Citizens Advice’s services are free, independent, confidential and impartial, and available to all regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To get advice online or find your local Citizens Advice, visit citizensadvice.org.uk
  7. For consumer advice, call the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 to talk in Welsh.
  8. We helped 2.6 million people face to face, by phone, email and webchat in 2017-18. For service statistics see our monthly publication Advice trends.
  9. Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.