Citizens Advice responds to CMA's two year loyalty penalty update
Alistair Cromwell, Acting Chief Executive of Citizens Advice, said:
“We’re pleased to see that, if current proposals are fully implemented, consumers stand to save more than £700 million a year in the insurance, mobile and broadband markets. As four in five people are still paying a loyalty penalty, it’s clear there’s still work to be done.
“We’re worried the FCA is only planning action in one of the three financial services markets we included in the super-complaint. We’re encouraged by the FCA’s bold proposals in the insurance market, which sets the bar high for other sectors.
“We agree with the CMA that the FCA should take action to support the 800,000 people facing ‘significant harm’ by paying the loyalty penalty in the mortgage market. But encouraging loyal customers to switch isn't an adequate remedy.
“In the savings sector, introducing Single Easy Access Rates (SEARs) was a strong proposal. It’s disappointing that this work has been paused, the FCA should implement SEARs once interest rates rise.
“Across telecoms, it’s good to see the CMA acknowledging that, while Ofcom has made progress in broadband, it has more work to do in protecting loyal mobile customers. Three has refused to make any changes and, though other major providers have signed voluntary agreements, these only stand to remedy £58 million of the £182 million of estimated harm each year.
“The economic fallout from the coronavirus pandemic continues to have a drastic impact on the finances of millions of people. It‘s essential that the FCA and Ofcom do more to stamp out this unfair practice, so loyal customers are not overpaying for essential services.”
Notes to editors
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