Customers in the UK who remain loyal to their utility providers are reportedly being penalised with charges totalling an additional £4bn a year, new figures have revealed.
The Guardian reports that any consumer being overcharged across all five of the markets faces “a potential total penalty of £877, made up of £439 for a mortgage, £264 for a mobile phone contract, £113 for broadband, £48 for a cash Isa account and £13 for home insurance”.
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The price cap for the energy market unveiled earlier this month is set to bring bring down loyal customers’ energy bills by about £75 a year on average, Citizens Advice said, but added that “excessive prices for loyal customers can be just as high – if not more so – in other markets”.
The charity has lodged a “super-complaint” about the “systematic scam” of “loyalty penalties” - the difference between what existing and new customers pay for the same service - with the Competition and Markets Authority (CMA).
Gillian Guy, chief executive of Citizens Advice, said: “It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal. 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% of people think it is wrong. The CMA needs to act now to stop people being exploited.”
A super-complaint can be made by a group to ask a regulator to investigate an issue or a market that it believes is working against the public interest, fast-tracking it to a higher power, says MoneySavingExpert. This is the fourth super-complaint filed by Citizens Advice since it gained the power to issue them in 2002.
The CMA confirmed that it would “investigate the concerns” with regulators such as the Financial Conduct Authority and Ofcom and publish a response within 90 days, ITV News reports.