CMA Unveils Reform Package for Mortgage, Insurance and Broadband Markets

CMA Reforms Loyalty Penalties

The Competition and Markets Authority (CMA) has introduced a series of “robust” reforms to prevent customers from being ripped off.

The Competition and Markets Authority (CMA) has outlined a series of reforms to change the way insurance, mobile phone and broadband markets operate following a ‘super complaint’ by Citizens Advice.

The CMA has investigated concerns raised by the group, following claims that companies penalise existing customers by charging them higher prices than new customers.  


Five markets highlighted by the super-complaint – cash savings, mortgages, household insurance, mobile phone contracts and broadband – were shown to be ripping off customers to the tune of £4 billion a year through loyal penalties.  

The “loyalty penalty” is described as the cost of being a long-standing customer, compared to a new customer receiving the same product or service. 

It also found that vulnerable people, including the elderly and those on a low income, may be at higher risk of paying loyalty penalties.  


The investigation uncovered “damaging” practices by firms across the UK, which the CMA believes to be exploitative.  

These include continual year-on-year stealth prices rises; costly exit fees; time-consuming and difficult processes to cancel a contract or switching providers; and requiring customers to auto-renew contracts.  

Millions of people are affected by these practices, the CMA said, with around one million in the mortgage market to anywhere up to 12 million in the insurance market. The loyalty penalty is also likely to arise in other markets, the investigation found.  


A number of recommendations are being made to regulators and the UK Government to prevent these practices. These include: 

  • “Cracking down on harmful business practices using enforcement and regulatory powers to clamp down on harmful practices that stop people getting better deals.”
  • “Setting out clearly the principles businesses across all markets should follow, such as people being able to leave a contract as easily as they enter it.”
  • “Targeted price caps to protect the people worst hit by the loyalty penalty, such as the vulnerable, where needed.”
  • “Firms should be publicly held to account for charging existing customers much more; regulators should publish the size of the loyalty penalty in key markets and for each supplier on a yearly basis.”

Andrea Coscelli, chief executive of the CMA, said: “Our work has uncovered a range of problems which leave people feeling ripped off, let down and frustrated. They shouldn’t have to be constantly ‘on guard’, spending hours searching for or negotiating a good deal, to avoid being trapped into bad value contracts or falling victim to stealth price rises.  

“That’s why we have today recommended a robust package of reforms. There must be a step changes to protect the people being hardest hit, including targeted price caps where necessary.” 

Coscelli added: “Together the CMA, regulators and government must act more promptly and powerfully to hold firms to account, stop them exploiting their customers and restore people’s trust in markets.” 

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