Yet a new survey shows more than 9 in 10 people said they think providers of essential services should charge loyal customers the same or less than new customers. Citizens Advice is calling on regulators to set targets to reduce the number of people who pay the loyalty penalty, and investigate solutions for vulnerable customers. It is also calling on the Competition and Markets Authority to investigate the cross-cutting impact of the loyalty penalty, with a focus on vulnerable consumers.
Citizens Advice has found evidence across all six markets that providers use unfair tactics that take advantage of consumers’ behaviours and deter them from finding a better deal. This includes contracts with complex terms and conditions, lack of notice when a contract ends, and financial barriers to exit a contract.
The most susceptible group to pay a higher price for the same service because of their loyalty in all six markets analysed by Citizens Advice were people aged 65 and older. Other affected groups included those people on low incomes or without a university education.
Gillian Guy, Chief Executive of Citizens Advice, said “It is unacceptable that consumers who stick with their existing provider of important services like energy and broadband are being penalised for their loyalty. Companies routinely use tactics that take advantage of human behaviour – and regulators are letting them get away with it.”
“That’s why regulators need to take action by setting targets to reduce the number of loyal customers who pay over the odds, and investigating solutions for vulnerable customers. The upcoming Consumer Green Paper is an opportunity for government to show they are on the side of the consumer by protecting them from unfair practices that exploit their loyalty.”