Report slams the loyalty penalty among other issues to be tackled in the financial services, water, energy and telecoms sectors.
The House of Commons Committee of Public Accounts has urged regulators in the financial services, water, energy and telecoms sectors to work together to prevent consumers being exploited.
The committee argued that the regulators in these sectors have a statutory responsibility to protect the interests of customers, particularly vulnerable consumers.
It detailed that the problems faced are often the same across all sectors – difficulty with switching to better deals, paying bills, mounting debts and understanding complex information.
The report further noted that despite the common issues, the individual regulators have different and inconsistent approaches to tackling them and have not made enough progress in working together and with the government.
The four main regulators in these sectors are the Financial Conduct Authority (FCA), Ofwat, Ofgem and Ofcom.
The report highlighted that consumers are being penalised for loyalty, suggesting that people who do not switch their energy, telecoms and financial services providers could be overpaying by up to £1,000 a year.
Citizens Advice lodged a super-complaint with the Competition and Markets Authority (CMA) in September last year, slamming the practice of overcharging loyal customers in the home insurance, mobile, broadband, mortgages and savings sectors.
The committee stated in the report that the charity had said that regulators lack a consistent approach to tackling vulnerability.
The FCA recently outlined its position on the CMA’s investigation into dual pricing, stating that its priority was fair outcomes for all consumers and that it was considering a regulatory approach to the issues raised.
This followed a letter from the government to the CMA, detailing that the government is consulting on measures to tackle the loyalty penalty which could see companies fined by the CMA if they are found to be breaking the rules.
The regulator launched its own study into pricing in the home and motor insurance markets in October 2018.
Last December, the CMA responded with a series of proposals which suggested the FCA should consider a pricing intervention.
The report also identified digital exclusion as a cross-sector problem, as well as unnecessarily complicated information leading to people not being able to choose the best deals, know what support is available or avoid being missold inappropriate products.
The committee said in the report: “Despite our concerns, we welcome the regulators’ acknowledgement that they can and should do more to address these issues.
“We will follow up with them in due course to examine what progress they are making.”
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