Loyalty penalty investigation: the latest

First published by Author on September 04, 2019 in the following categories: Investigations Loyalty Penalties Pricing and tagged with cma | incentives | investigations | loyalty penalties | pricing

There has been an update about some of the positive steps that have been taken in the wake of the huge loyalty penalty investigation, often referred to as a “super complaint”.

A “super complaint” is a complaint that’s usually submitted by a consumer body on behalf of a number of people who have the same complaint against sometimes several companies, and sometimes across more than one sector. The loyalty penalty super complaint stemmed from the Citizens Advice Bureau who had raised concerns over customers paying more for goods and services for sticking with the same suppliers.

This one has covered notable areas that include insurance, mortgages, bank accounts, broadband services and mobile services.

Background to the loyalty penalty investigation

The CMA (Competition and Markets Authority) got involved in the loyalty penalty investigation last year. With an estimated total of £4bn in extra costs spent by millions of customers who have essentially been penalised for staying loyal to companies, action had to be taken. This is especially important since the most vulnerable customers, like the elderly and those with low incomes, are thought to be worst affected.

Damming practices used to exploit customers had been revealed. These included things like stealth costs, expensive exit fees, and difficult cancellation processes. The result was a number of steps and recommendations that the CMA put in place to prevent customers from falling victim to unscrupulous practices that exploited their loyalty with higher prices.

Latest in the loyalty penalty super complaint

A working group was announced in March 2019 as part of the aftermath of the CMA’s loyalty penalty investigation. This group’s mission is to oversee the recommendations and changes that the CMA want to implement.

In June, a response from the government was published by the CMA as well, with the recommendations the CMA put in place a welcome move.

A progress update was also released which has covered the steps taken to move forward with the CMA’s recommendations. This included a note on the need for regulators to understand the extent of the complaint and ensure that they assist in enforcing recommendations.

It’s a good read, and you can take a look at yourself here.