'Super complaint' aims to tackle £4bn borrower loyalty penalty

Across five markets - including mortgages, savings and home insurance - the charity found that 8 in 10 people are paying a significantly higher price for remaining with their existing supplier, averaging £877 per year.

The charity also found the loyalty penalty is disproportionately paid by vulnerable consumers, such as older people and people with mental health issues, as these groups are particularly likely to struggle with switching.

The Government recently introduced a price cap in the energy market which will bring down loyal customers’ bills by £75 per year on average, and Citizens Advice says that by submitting this complaint, it hopes to see the move extended across all markets.

Gillian Guy, chief executive of Citizens Advice, said: “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.

“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.

“The loyalty penalty is clearly unfair - 89% of people think it is wrong. The CMA needs to act now to stop people being exploited.”

Eric Leenders, managing director of personal Finance at UK Finance, commented: “UK Finance and its members will carefully consider the issues raised by Citizens Advice and respond in due course.

“The industry has already implemented a number of measures to further improve competition in the mortgages and savings market, including communicating more clearly with savers about the rates they receive and helping longstanding mortgage borrowers switch to a better deal.

“We would always encourage customers to shop around and find a deal that best suits their needs and will continue working with the regulators to make this as easy as possible, including through standard terms and price comparison tools.”