Today the UK's Competition and Markets Authority (CMA) received a so-called 'super-complaint' from Citizens Advice about long term customers overpaying for key services. The services under scrutiny include broadband, as per our headline, plus others - such as mobile phone contracts, mortgages, savings, and household insurance.
About a month ago HEXUS wrote about how UK broadband customers face steep price rises at the ends of their contracts, and this is a worthwhile follow up to that story (which came via uSwitch) as now the government, via the CMA, is involved. Back then we referred to the suckering of loyal customers as an 'awareness penalty' but Citizens Advice call this same phenomenon a 'loyalty penalty'.
The core of the complaint is that "people who stay with their provider - often on default or roll over contracts - can end up paying significantly more than new customers," and it is that that Citizens Advice defines as the 'Loyalty Penalty'. It has asked that a particular focus be put on the implications for 'vulnerable customers' which are hardest hit by this kind of chicanery.
To investigate the concerns and find possible solutions the CMA will be engaging with relevant regulators such as the FCA and Ofcom. A response will be penned in 90 days time but already a broad outline of possible outcomes has been provided, as below:
- making recommendations to government to change legislation
- action by sectoral regulators
- taking competition or consumer enforcement action
- launching a market investigation or market study
- deciding there is no action required
The CMA's Senior Director, Daniel Gordon, wrote that the concerns raised by Citizens Advice will be carefully considered and steps will be decided upon to make sure that businesses "don't take unfair advantage of their long-standing customers".
IPSA responds
The Internet Services Providers' Association (IPSA) in the UK has already responded to the super-complaint raised by Citizens Advice regarding 'loyalty penalties'. This body is "the voice of the UK internet industry" so is obviously cautious about today's 'super complaint' news having a financial /administrative impacts on its members.
In a statement on its web page IPSA says that it is worried that Citizens Advice talking about a 'loyalty penalty' conflates customer loyalty with ill-informed or unengaged customers. IPSA highlights many reasons for loyalty beyond pricing, such as performance, service quality, and reliability. Moreover, it is currently working with its members to introduce end-of-contract notifications, as recommended by Ofcom. Last but not least, IPSA fully supports efforts to engage with vulnerable customers to provide support and help with switching.
