Citizens Advice response to FCA announcement on cash savings
Gillian Guy, Chief Executive of Citizens Advice said:
“It’s been over a year since we submitted a super-complaint that found loyal customers are being penalised to the tune of £1.1 billion a year when it comes to their hard-earned savings.
“It’s great to see the FCA are cracking down on the loyalty penalty and introducing a new single easy access rate, a move it predicts will save people £260 million a year.
“The regulator must now hold its nerve and make sure these proposals are introduced to stop loyal customers being penalised.”
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 our super-complaint, in December 2018, said it agreed and had found damaging practices by firms which exploit unsuspecting customers, and said it wanted to see urgent action.
The CMA stated it would report back on whether sufficient progress has been made by individual regulators in tackling the loyalty penalty a year after its initial response. It will also consider what next steps are necessary, including whether to conduct its own market study.
Research in 2018 by Citizens Advice found that across five essential markets (mobile, broadband, home insurance, mortgages and savings):
British consumers lose around £4 billion a year to the loyalty penalty (or £11 million a day).
Eight in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.
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 £36 billion returned to customers in refunds and compensation so far.
Notes to editors
- 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.
- Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.
- The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.
- Citizens Advice offers Pension Wise services at 500 locations in England and Wales.
- 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.
- To get advice online or find your local Citizens Advice, visit citizensadvice.org.uk
- For consumer advice, call the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 to talk in Welsh.
- 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.
- Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.