Citizens Advice issues super-complaint as loyalty hits customers £4bn a year

The charity believes sticking with the same service providers across those sectors is costing customers a cumulative £4.1bn in what it describes as a “loyalty penalty”. On average, customers pay an extra £877 for sticking with the same providers.

It added that eight in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

In addition to the super-complaint, the Financial Conduct Authority (FCA) has announced it will investigate whether loyal customers are paying too much for home and car insurance.

“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,” said Citizens Advice chief executive Gillian Guy.

Citizens Advice cited the temporary price cap in the energy sector, which it said will offer protection to some loyal customers and will bring down bills by £75 per year on average.

Guy added: “It’s completely unacceptable that consumers are still being ripped off for being loyal to companies they rely on every single day.

“Regulators and government have recognised the loyalty penalty as a problem for a long time - yet the lack of any meaningful progress makes this super-complaint inevitable. The government’s price cap in the energy market will protect some loyal customers. However, there’s still a long way to go in other sectors.”

Andrew Bailey, chief executive of the FCA commented: “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.”