LONDON, Dec 19 (Reuters) - Britain’s Competition and Markets Authority (CMA) has proposed a package of reforms to tackle substantial loyalty penalties charged by unscrupulous firms, in a move that could save around 4 billion pounds ($5 billion) a year for millions of consumers.
It comes after consumer body Citizens Advice expressed concerns as part of a so-called “super-complaint” that companies penalise existing customers by charging them higher prices than new customers.
The CMA said the five markets highlighted by Citizens Advice - cash savings, mortgages, household insurance, mobile phone contracts and broadband - charged a total loyalty penalty of around 4 billion a year, with elderly and low-income consumers seen as most vulnerable.
The British watchdog also uncovered year-on-year stealth price rises, costly exit fees and complex processes to cancel contracts and has made several recommendations to regulators and government to help stop consumers being ripped off.
The CMA said it wanted companies to be publicly held to account for overcharging existing customers and that regulators should publish the size of loyalty penalties in key markets and for each supplier annually.
The CMA will also decide whether consumer law should be reinforced as it found evidence of firms continually raising prices in this market. ($1 = 0.7893 pounds) (Reporting By Pamela Barbaglia, editing by Sinead Cruise)