FCA's mortgage study welcome, but thousands still pay over odds
In response to the FCA’s market study into the mortgages market Gillian Guy, Chief Executive of Citizens Advice, said:
“We welcome the FCA’s new proposals to unshackle mortgage prisoners by helping them move on to cheaper deals.
“However, hundreds of thousands of people are still paying over the odds simply for being loyal to their provider.
“The FCA says it’s doing more research to work out why customers aren’t switching, but urgent action is needed now. While the FCA drags its feet loyal mortgage customers are being penalised a staggering £1.4m every day.
“The FCA must now go much further to protect these customers from paying the loyalty penalty. We want to see concrete action by the end of the year to stop loyal customers being taken advantage of.”
Citizens Advice submitted a super-complaint on the loyalty penalty to the CMA in September 2018 calling for the regulator to consider how the problem can be fixed. The CMA’s response to our super-complaint in December said it agreed and had found damaging practices by firms, which exploit unsuspecting customers. The CMA said it wanted to see urgent action.
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 £33.6 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.
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