A new season but the same old rip-offs from big bill providers, such as insurers and mortgage lenders
Seasons change (we officially wake up to autumn tomorrow) but the behaviour of big bill providers, from insurers to mortgage lenders, regrettably does not.
They are still ripping off customers to the tune of millions of pounds a day despite regulators vowing to stamp out the scourge.
This time last year the consumer group Citizens Advice issued a rare ‘super complaint’ to watchdog the Competition and Markets Authority whose role it is to ensure markets operate fairly for customers.
Such a complaint can only be issued by an officially recognised body when it sees market activities harming consumers.
This time last year the consumer group Citizens Advice issued a rare ‘super complaint’ to watchdog the Competition and Markets Authority about big bill providers
At the root of its complaint was the ‘loyalty penalty’ where customers see their bills climb year in and year out to unacceptable heights, while new customers are offered bargain deals.
The CMA decided that the quickest way to achieve results was to demand regulators, such as the Financial Conduct Authority for insurance and Ofcom for mobiles, take swift action to force companies to mend their ways.
We cheered this step loudly as a recognition of our own long-standing Broken Loyalty campaign highlighting the menace. But Gillian Guy, chief executive of Citizens Advice, tells us that this week’s first anniversary is nothing to celebrate.
Rather than champagne corks being popped, the only sound is the screech of dragging heels by watchdogs and providers.
Guy tells me: ‘By this point we expected regulators to have already set out how they would abolish the loyalty penalty, and how they would better protect vulnerable and older people. Sadly, across the five important markets we focused on – mobile, broadband, home insurance, mortgages and savings – there just hasn’t been enough progress.’
Change takes time but 12 months is excessive by any stretch. Guy pats the back of one market alone – mobiles.
As part of Ofcom’s proposed remedies, it has come to voluntary arrangements with all providers – except for Three – to implement measures by February that will reduce many loyal customers’ bills. Ofcom is now also requiring providers to alert mobile and broadband customers when contracts end.
She welcomes in the savings market the FCA’s proposal of a basic savings interest rate. Guy says: ‘This needs to be confirmed and implemented by the end of the year.’
There has been a deathly silence from the mortgage market, where the average standard variable rate that loyal customers often end up paying far exceeds the cut-price deals for new customers.
Similarly, silence engulfs the insurance market. We, like Citizens Advice, demand the regulator crack down on ‘price-walking’ – the crafty tactic of gradually increasing prices year on year.
The charity wants this tackled by the end of next year. If nothing transpires it plans to demand the CMA launch a ‘market study’.
Companies that blithely apply the loyalty penalty could be forced to provide data on the watchdog’s request – and come up with urgent remedies. Only then might we witness a meaningful change … perhaps in time for next autumn.
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS