On 16 October 2018, Amelia Fletcher took part in a roundtable discussion with CMA on behavioural economic issues arising from the Citizen’s Advice super-complaint into loyalty penalties. This complaint looks at long-standing customers being charged more for financial services than new customers, and covered several areas including mobile, broadband, household insurance, mortgages and savings. The FCA issued a statement regarding the complaint and began working with CMA to address the issues. In December 2018, the CMA responded to the Super Complaint. They set out a package of reforms to address the problems and specifically in relation to the five markets identified by Citizen's Advice. These are:a) stopping harmful business practicesb) publicising the loyalty penalty to hold suppliers to accountc) giving people more help in getting better dealsd) protecting consumers from harm, particularly vulnerable consumerse) better understanding of the loyalty penalty across marketsThe recommendations across five markets include: mobile, broadband, cash saving, insurance and mortgages.The CMA believes these will achieve real changes, help existing customers get a fair deal and help stop loyal consumers being ripped off. It has also launched investigations in the anti-virus software market, as a first step in a wider programme of enforcement in this area. You can read the response to the super complaint online and the FCA update (published 9 January 2020).On 22 September 2020 the FCA published the final report of its market study into the pricing of motor and home insurance. This looks at the issue of loyalty penalties, whereby consumers who remain with a supplier pay a higher cost for services than new consumers. The consultation outlines proposals which mean firms would be prevented from gradually increasing the renewal price to consumers over time (known as 'price walking') other than in line with changes in customers’ risk.The consultation paper can be found online, and comments are welcome until 25 January 2021.
Sir Clive Granger BuildingSchool of Economics The University of NottinghamUniversity ParkNottingham NG7 2RD
telephone: +44 (0)115 84 66067 email: chris.starmer@nottingham.ac.uk
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