Loyalty penalty

We're calling on regulators 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 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

In September 2018, Citizens Advice submitted a super-complaint about the £4.1bn 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 7 years that we used these powers as a designated consumer body.

In their response, the CMA agreed with our findings. They recommended that regulators take urgent action, and provide regular updates on what steps they are taking to stop loyal customers from being penalised.

In June 2019, the CMA reported on the progress being taken to tackle the loyalty penalty 6 months after their initial response. The Government also committed to ensuring that both they and regulators take further action to tackle these harmful business practices.

We've since continued to work on the issue, including a  report setting out the progress that has been made 2 years on from submitting the super-complaint. Regulators have taken steps to address the issue, but more needs to be done to solve the problem. We'll continue to engage with regulators and the government to help end the loyalty penalty.

What we’re saying

Read our loyalty penalty policy research:

• Finishing the job on the loyalty penalty: the mortgage and mobile handset markets
• The loyalty penalty in essential markets: two years since the super-complaint
• The loyalty penalty in essential markets: one year since the super-complaint
• Excessive prices for disengaged consumers: A super-complaint to the Competition and Markets Authority [ 0.78 mb]
• The cost of loyalty: exploring how long standing customers pay more for essential services
• The insurance loyalty penalty: unfair pricing in the home insurance market
• Exploring the loyalty penalty in the mortgage market
• Exploring the loyalty penalty in the broadband market

Read our loyalty penalty blogs:

• Loyal mortgage customers are losing £1.4 million every day
• How regulators can save people money on their bills
• Here's how to stop loyal customers losing £11 million a day
• Loyal consumers are being ripped off to the tune of £4.1 billion
• Time's running out to fix the loyalty penalty
• 3 of the largest mobile phone providers are overcharging loyal customers
• Being a consumer is far too hard
• Power to the people: cutting energy prices
• What's the true cost of loyalty for consumers?