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Loyalty penalty

We're calling on the Competition and Markets Authority to tackle the loyalty penalty in essential markets and protect people from being ripped off.

Why things need to change

Across essential services, customers are being penalised for their loyalty - from telecoms 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. Our 2018 research found 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

Last September, Citizens Advice submitted a super-complaint about the £4bn 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. This was the first time in seven years that we used these powers as a designated consumer body.

Last December, the CMA agreed with our findings and recommended regulators take robust action.

What we’re saying

Read our loyalty penalty policy research:

Read our loyalty penalty blogs: