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Citizens Advice responds to FCA announcement on loyalty penalty in insurance markets

28 Mai 2021

Matthew Upton, Director of Policy at Citizens Advice, said:

“It’s more than two years since we submitted our super-complaint on the £4 billion-a-year loyalty penalty paid by consumers  across the mortgages, savings, mobile, insurance and broadband markets. We’re pleased to see the FCA setting the bar so high in stamping out this systematic scam, and we now need to see similar action in the other markets.

“No longer will loyal insurance customers face price-walking - gradual year-on-year increases - that can leave them paying way over the odds. Instead firms will have to do the right thing and offer them the same deal as a new customer.

“For us, and those loyal customers, this fix cannot come soon enough.”

BACKGROUND:

Citizens Advice submitted a super complaint on the loyalty penalty - in the mobile, broadband, home insurance, mortgages and savings markets - to the CMA in September 2018 calling for it to consider how the problem can be fixed. The CMA’s response to the super complaint, in December 2018, said it agreed and had found damaging practices by firms which exploit unsuspecting customers. The CMA said it wanted to see urgent action. 

In April 2019 the charity found that home insurance companies make 100% of their profits from the loyalty penalty.

This is the fourth super complaint Citizens Advice has made since being given the power in 2002. Its super complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £38 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 0808 223 1133 or 0808 223 1144 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.