The Competition and Markets Authority (CMA) has agreed to investigate a “super-complaint” which was lodged last month by Citizens Advice on behalf of loyal savers.
The complaint alleges that bank customers are being punished for their loyalty by missing out on the higher savings rates and better deals which are being offered to new customers.
In fact, Citizens Advice has estimated that UK consumers are paying a “loyalty penalty” of £4bn per year across the mobile, broadband, home insurance, mortgages and savings markets. The charity has asked the CMA to “act now to stop people being exploited”.
“It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal,” said Citizens Advice chief executive Gillian Guy. “As a result of this super complaint, the CMA should come up with concrete measures to end this systematic scam.
“Regulators and government have recognised the loyalty penalty as a problem for a long time, yet the lack of any meaningful progress makes this super complaint inevitable.
“The loyalty penalty is clearly unfair – 89 per cent of people think it is wrong. The CMA needs to act now to stop people being exploited.”
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Super complaints are rare and are only made in cases where a large number of consumers are deemed to be at risk of harm due to corporate practices.
In this case, Citizens Advice is calling on the CMA to put measures in place to protect consumers from being overcharged when saving their money, or spending it on household essentials.
“We will now carefully consider the concerns raised by Citizens Advice, and any further evidence on this issue,” said Daniel Gordon, senior director at the CMA.
“Our response will set out the CMA’s views on this important issue and any next steps we think are needed to make sure businesses don’t take unfair advantage of their long-standing customers.”
The CMA is expected to issue a formal response to the super-complaint within 90 days and possible outcomes include: making recommendations to government to change legislation; action by sectoral regulators; taking competition or consumer enforcement action; launching a market investigation or market study; or deciding there is no action required.
Also published on Medium.Last updated: October 10th, 2018