Citizens Advice has submitted a super-complaint to the Competition and Markets Authority (CMA) calling on them to identify remedies and recommendations to put an end to the penalty paid by loyal and disengaged consumers.

The super-complaint covers several markets, including insurance, cash savings and mortgages.

Research by Citizens Advice found that across five essential markets (mobile, broadband, home insurance, mortgages and savings):

• British consumers lose £4.1 billion a year to the loyalty penalty.
• 8 in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.
• The loyalty penalty is, on average, £877 per year – equal to 3% of the average household’s total annual expenditure.

Gillian Guy, Citizens Advice chief executive, 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.”

This is the fourth super-complaint Citizens Advice has made since being given the power in 2002. Their complaint on payment protection insurance (PPI) in 2005 has seen at least £32.2 billion returned to customers in refunds and compensation so far.

The FCA says it has been concerned about the issue of long-standing customers being charged more for some financial products than new customers for some time. This has informed our earlier work on cash savings and mortgages.

In the FCA’s 2018/2019 Business Plan it announced that we were looking at the pricing practices of general insurance firms. As part of that work it will launch a market study looking at how general insurance firms charge their customers for home and motor insurance. The terms of reference for this market study will be published in a few weeks’ time.

Andrew Bailey, chief executive of the FCA, said: “Citizens Advice have raised a number of important issues and we will work closely with the CMA as they investigate this super-complaint.

“We expect firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing. It is important to get the balance right so that existing customers do not miss out on the benefits of competition and innovation, including when they purchase or renew their general insurance products.

“The general insurance market study we have announced today will help us examine the issues we have already identified in the market in more detail.”