Dual pricing: Capping prices risks industry profits, warns Fitch
The CMA had recommended price caps, as regulators propose solutions to the 'loyalty penalty', but the ratings agency suggests it could destabilise the market.
Fitch Ratings has cautioned that the introduction of price caps could depress industry profits.
The warning follows a proposal by the Competition and Markets Authority (CMA) to introduce price caps on rolling contracts in multiple markets.
The department is aiming to remedy the ‘loyalty penalty’ that existing customers pay above new customers. Price disparities across five markets, including insurance, are estimated to cost customers £4bn per year.
In a statement published on 24 June, Fitch
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