Citizens Advice responds to FCA announcement on loyalty penalty in insurance markets
Matthew Upton, Director of Policy at Citizens Advice, said:
“It’s more than two years since we submitted our super-complaint on the £4 billion-a-year loyalty penalty paid by consumers across the mortgages, savings, mobile, insurance and broadband markets. We’re pleased to see the FCA setting the bar so high in stamping out this systematic scam, and we now need to see similar action in the other markets.
“No longer will loyal insurance customers face price-walking – gradual year-on-year increases – that can leave them paying way over the odds. Instead, firms will have to do the right thing and offer them the same deal as a new customer.
“For us, and those loyal customers, this fix cannot come soon enough.”
Citizens Advice submitted a super-complaint on the loyalty penalty – in the mobile, broadband, home insurance, mortgages and savings markets – to the CMA in September 2018 calling for it to consider how the problem can be fixed. The CMA’s response to the super-complaint, in December 2018, said it agreed and had found damaging practices by firms that exploit unsuspecting customers. The CMA said it wanted to see urgent action.
In April 2019 the charity found that home insurance companies make 100% of their profits from the loyalty penalty.
This is the fourth super-complaint Citizens Advice has made since being given the power in 2002. Its super-complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £38 billion returned to customers in refunds and compensation so far.