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Citizens Advice

Making sure millions of consumers are charged fairly for essential services

The most vulnerable members of society fall victim to the ‘loyalty penalty’. This means they often pay more for services like mobile phone contracts and broadband because they stay loyal to a single provider. Citizens Advice wants to stop this with a ‘super-complaint’. We helped them analyse wider economic impacts of the loyalty penalty, so they could develop the most powerful arguments to support their super-complaint.

Key successes

  • Identified areas where the loyalty penalty is most likely to have negative impacts on market efficiency
  • Ensured millions of consumers are less likely to be trapped in bad-value contracts for essential services.

Tackling the loyalty penalty

Millions of people in the UK are victims of the loyalty penalty. They pay more for essential services, such as mobile phone contracts, broadband and financial services, because they stay loyal to providers instead of shopping around for better deals. The most vulnerable members of society, such as older people or those on lower incomes, are most likely to be hit.

Citizens Advice, which campaigns on behalf of consumers, wants to stop this. They were preparing a ‘super-complaint’ to the Competition & Markets Authority (CMA). This would require the CMA to investigate market practices that could be harming the interests of consumers.

Putting customers first

Citizens Advice asked for our help in analysing wider economic impacts of the loyalty penalty. Our work involved a full review of extensive evidence from sources such as academics, sector regulators and company balance sheets. We identified areas where the loyalty penalty is most likely to have negative impacts on market efficiency, with companies profiting at the expense of consumers. This included five key markets: cash savings, mortgages, household insurance, mobile phone contracts and broadband.

Our objective and robust stance helped Citizens Advice understand where to focus further analysis to develop the most powerful arguments to support their super-complaint. Following a thorough investigation, the CMA announced a package of reforms to tackle the loyalty penalty in five different markets. The package aims to crack down on harmful business practices using enforcement and regulatory powers. This means that, in the future, millions of consumers are less likely to be trapped in bad-value contracts for essential services.

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Citizens Advice: Making sure millions of consumers are charged fairly for essential services

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Christian Norris

PA data analytics and business intelligence expert
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