Advertisement
CHRISTMAS SPECIAL: HALF PRICE Big Issue magazine subscription
SUBSCRIBE
News

UK companies could face instant fines in 'loyalty penalty' crackdown

But consumer charities said the proposed changes are not enough to protect people

Mobile, insurance and broadband firms could soon be fined for overcharging loyal customers in a move that could save consumers up to £4bn a year.

The government will consult on giving the Competition and Markets Authority (CMA) power to punish providers that mislead customers and exploit long-term customers – who often end up paying more than £1,000 more than people who switch providers regularly, according to Citizens Advice research.

Business secretary Greg Clark also said the government would give the same powers to other regulators, like Ofcom and the Financial Conduct Authority (FCA), to protect loyal customers.

Ministers think the new measures will deter companies from signing consumers up on hard-to-exit contracts with unfair terms and conditions.

It will also give regulators more power to tackle problems like secondary ticketing and unfair terms for car home residents.

The business secretary said: “The key to successful businesses is ensuring that they work for the benefit of consumers and that unfair practices are tackled effectively.

Advertisement
Advertisement

“Consumer loyalty should not be exploited and nor should consumers have to work so hard to get a fair deal. We have already shown our willingness to take action through our energy price cap, which means every household is protected from unjustified price rises.

“We are committed to ensuring consumers are not unfairly targeted and penalised for their loyalty and that they can access quality products and services for a price that is competitive and fair.”

This is just the tip of the iceberg

The government will also consider ending the practice of mobile providers charging customers the same rate once they have paid off their handsets at the end of the minimum contract period.

But according to Citizens Advice, which made a supercomplaint about loyalty penalties to the CMA in September, the government must do more.

Chief executive Gillian Guy said the mobile phone loyalty penalty had cost consumers £341m since then.

“This is just the tip of the iceberg,” Guy said. “While the government’s announcement is welcome, we’re disappointed by the lack of action from regulators.

“The FCA and Ofcom have had six months since the CMA issued its findings on our supercomplaint and there has been little progress. They need to set out their plans urgently on how they will tackle this systematic scam.”

The new powers will be consulted on in the government’s upcoming Consumer White Paper.

Advertisement

Change a vendor's life this Christmas

This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.

Recommended for you

View all
'Disgraceful': Tories condemned for wasting £715m on sending no asylum seekers to Rwanda
Asylum seekers

'Disgraceful': Tories condemned for wasting £715m on sending no asylum seekers to Rwanda

Ukrainian mum who fled war dreams of buying Christmas tree and presents for her children
Christmas

Ukrainian mum who fled war dreams of buying Christmas tree and presents for her children

Labour must 'immediately' scrap two-child benefit cap if it wants to end child poverty, charities say
phillipson and starmer at school
Child poverty

Labour must 'immediately' scrap two-child benefit cap if it wants to end child poverty, charities say

Labour vow to end cladding crisis by 2029 leaves campaigners fearing 'living nightmare' will continue
Image of flats in London next to the Thames
Cladding crisis

Labour vow to end cladding crisis by 2029 leaves campaigners fearing 'living nightmare' will continue

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know