Watchdog: Cap prices

Companies should be named and shamed for overcharging customers, according to a watchdog.

The Competition and Markets Authority (CMA) believes customers should be protected by price caps, after finding UK consumers overpay by £4 billion a year.

It has now released a series of recommendations to tackle the so-called loyalty penalty–the amount a customer loses by being loyal – after calls for action to stop people being exploited.

Citizens Advice launched a “super complaint” in September, after finding British consumers were losing £4.1 billion across the mobile, broadband, home insurance, mortgages and savings industries to the so-called “loyalty penalty”.

It found 80% of consumers were paying a significantly higher price to at least one of their providers simply for staying with them.

Gillian Guy, chief executive of Citizens Advice, said: “The loyalty penalty costs customers £11 million every day. The Government and regulators need to show they’re on the side of consumers by taking urgent action to end this systematic scam.”

The CMA has uncovered damaging practices by firms, including year-on-year stealth price rises, costly exit fees and difficult cancellation processes.

Italsofoundthat vulnerable people, including the elderly and those on a low income, may be more at risk of paying the loyalty penalty.

The CMA said one million people with mortgages and nearly 12 million with insurance deals were affected, and the loyalty penalty was also likely to arise as an issue in other markets.

Andrea Coscelli, CMA chief executive, said: “Millions of loyal customers are being taken advantage of each year by firms – and end up paying much more than they should do. This must come to an end.”