The Citizens Advice “super-complaint” to the Competition and Markets Authority over markets which rip off loyal, disengaged customers, covered by Mortgage Strategy earlier today, suggests a price cap for mortgages.
Citizens Advice calls it a “systematic scam” that, across five markets critical to daily living, including home insurance and mortgages, loyal consumers are being overcharged an estimated £900 a year.
It gives the example of a home insurance customer who could end up paying 70% more than a new customer if they stay with the same provider for five years.
Alongside the broader recommendations of encouraging consumers to engage with the market, protecting consumers from exploitation, and finding specific protections for vulnerable and low-income consumers, Citizens Advice has a suggestion for the mortgage market in particular.
Citizens Advice says CMA should look at a relative cap on mortgages which, it says, “might reduce detriment in the mortgage market,” going on to describe in detail how this proposed cap might work:
“There is reason to think that a relative restriction between introductory and standard rates for mortgage consumers might lead to lower prices for consumers on standard variable tariffs rather than an increase in introductory rates,” it states.
Significant price differentials for loyal consumers hit the poorest and most vulnerable in society most, says Citizens Advice. It argues markets should serve, instead of punish, these groups.
Citizens Advice calls on CMA to thoroughly investigate the penalty paid by loyal and disengaged consumers wherever it occurs and “propose recommendations and remedies that can be implemented by itself, sector regulators and the government.”