Britain’s Citizens Advice has lodged a super complaint against the country’s financial and telecom providers saying existing customers were being overcharged yearly to the tune of $5.2 billion.
Following a complaint by Britain’s consumer body Citizens Advice that customers who do not switch providers were being “ripped off”, financial and telecom service providers are likely to be investigated.
On Friday, Citizens Advice said, such customers were being overcharged to the tune of $5.2 billion (4.1 billion pounds) a year and asked Britain’s Competition and Markets Authority (CMA) to investigate the matter.
“The practice of overcharging loyal customers is widespread and Citizens Advice has repeatedly warned that loyal consumers are being ripped off,” said Gillian Guy, Citizens Advice’s CEO.
Citizens Advice has submitted a super complaint, which the government defines as raising “any feature, or combination of features” of a market for goods or services which “appears to be significantly harming the interests of consumers”.
On its part the CMA said, it would weigh the issues raised and would consider the matter seriously. As part of this effort, it will engage with relevant regulators, including the country’s Financial Conduct Authority (FCA) and Ofcom. The CMA will publish a response within 90 days.
It went on to add, possible outcomes include recommendations to change legislation, action by sectoral regulators and competition or consumer enforcement action.
According to Citizens Advice’s research, 8 out of 10 people were paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.
“As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam,” said Guy.
The FCA said it would launch a market study into how general insurance firms charge their customers for home and motor insurance.
“Citizens Advice have raised a number of important issues and we will work closely with the CMA as they investigate this super-complaint,” said FCA Chief Executive Andrew Bailey.
The FCA said it was already looking at the savings and mortgages market.
UK Finance, which represents banks, said the industry has already made changes to improve competition in mortgages and savings markets, including helping longstanding borrowers switch to a better deal.
This is the fourth such complaint made by Citizens Advice since 2002. In 2005, thanks to its complaint on payment protection insurance (PPI) customers had receive 32.2 billion pounds in compensation and refunds.