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Excessive prices for disengaged consumers: A super-complaint to the Competition and Markets Authority

Consumer

27 September 2018

Citizens Advice is calling on the Competition and Markets Authority to tackle the loyalty penalty in essential markets and protect people from being ripped off.

Read our super-complaint here 795 KB .

Why things need to change

Across essential services, people are being penalised for their loyalty - from mobile and broadband, to financial services. Huge numbers of customers are on uncompetitive deals, paying far more for a service than a new customer would.

We don’t think a customer’s loyalty should be penalised. There are clear reasons why this penalty should be tackled:

  • The loyalty penalty is widespread. 8 in 10 bill payers are currently charged significantly higher prices for remaining with their existing supplier in at least one essential market. We estimate that loyalty costs these consumers several billion a year.

  • Customers don’t realise they’re being penalised for their loyalty, and face obstacles when trying to shop around. Depending on the market, up to 64% of consumers didn’t know that loyal customers are charged the same or more than newer customers.

  • Customers in vulnerable situations are disproportionately stung by the penalty. Older, lower income and less educated consumers are more likely to face the loyalty penalty.

What we are doing

Citizens Advice has submitted a super-complaint about the loyalty penalty to the Competition and Markets Authority (CMA). A super-complaint can be made by certain consumer organisations, requiring regulators to investigate markets or market practices that they think are significantly harming the interests of consumers.

Our super-complaint will require the CMA to complete a thorough investigation into the loyalty penalty in essential markets and take appropriate action following the result. We think the CMA should use this as an opportunity to introduce strong, long-lasting solutions to prevent people from being ripped off by the loyalty penalty.

Citizens Advice helped resolve more than 900,000 consumer issues last year, including through our consumer advice and advocacy work. This is the first time in seven years that we are using our powers as a designated consumer body to submit a super-complaint.

What we’re saying

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