CMA makes recommendations in response to "loyalty penalty" super-complaint from Citizens Advice

United Kingdom

Yesterday, the Competition and Markets Authority (CMA) responded to the super-complaint submitted by Citizens Advice earlier this year that companies penalise existing customers by charging them higher prices than new customers (the so called "loyalty penalty"). This follows an investigation into the loyalty penalty in the 5 markets identified by Citizens Advice: mobile, broadband, savings accounts, mortgages and household insurance.

We previously reported on the Citizens Advice super-complaint and provided a short explanation of what a super-complaint is here.


The CMA found that in these 5 markets, there is a total loyalty penalty of approximately £4 billion a year and firms conduct harmful practices including: continual year on year stealth price rises; costly exit fees; time-consuming and difficult processes to cancel contracts or switch to new providers; and requiring customers to auto-renew or not giving sufficient warning their contract will be rolled over.


The CMA has made 8 cross-market recommendations to regulators and the government, including proposed actions by the CMA, and made specific recommendations to the Financial Conduct Authority (FCA) and Ofcom for the 5 markets, including new directions for existing reviews and interventions.

The key recommendations are as follows:

Cross-market recommendations:

The CMA has called for consumer law reform and new powers for it to issue substantial fines for breaches of consumer law in this area. It recommends bolder use of enforcement and regulatory powers and, to lead by example, launched its own investigation into the anti-virus software market yesterday.

The CMA also recommended that the loyalty penalty in key markets and for each supplier is published in order to make suppliers accountable and for targeted pricing regulations to be introduced to protect vulnerable consumers.

Recommendations in the 5 markets:

  • Insurance: the FCA must look at pricing practices where firms continually raise prices in its current general insurance market study and take action, which should include pricing interventions.
  • Mobile: Ofcom must work to ensure providers stop charging pay-monthly customers the same rate once they have paid for their handset once the minimum contract period ends and ensure customers are aware of SIM-only packages.    
  • Broadband and Savings Accounts: Ofcom and the FCA should consider pricing interventions and explore collective switching options.    

  • Mortgages: the FCA should investigate consumers who can switch but do not and consider ways of supporting these customers in switching.

Next steps

The CMA decided it will not conduct a market study across the 5 markets at this stage despite calls made by Citizens Advice for an extensive review. However, the CMA will provide an update on its progress to the Consumer Forum in 6 months and consider whether a market study is required in 12 months. The FCA and Ofcom will separately provide updates on the progress of their activities.


This response and the CMA’s wide-ranging recommendations are further evidence of the CMA’s increased focus on consumer issues and its desire to have a much greater impact with its consumer enforcement powers. The CMA’s response is also notable for the speed in which it has reviewed these practices. It had only 90 days to consider the complaint and, in that time, has come up with far-reaching remedies, a sign perhaps of wanting to be seen as an efficient and effective regulator prior to Brexit.