Analysis: The dual pricing super complaint


  • Citizens Advice’s super complaint encompasses five sectors: home insurance, mobile, broadband, savings and mortgages
  • Previous super complaints have had mixed outcomes. The PPI super complaint led to record fines and reimbursements.
  • The industry has taken some steps to tackle dual pricing. A set of sweeping guidelines and principles  on pricing practices was created in May, while the FCA has enforced rules saying customers must be told the previous year’s price at renewal.
  • Although home insurance is named in the super complaint, other personal lines products could be set to come under scrutiny.

Citizens Advice has launched a super complaint targeting dual pricing to the Competition and Markets Authority. The complaint is the consumer champion’s first in seven years and shines a spotlight on five key areas: home insurance, mobile, broadband, mortgages and cash savings.

The super complaint forces an investigation into the pricing practices of the sectors named and sees what many already identify as a stain on the industry thrown squarely into the public view. The CMA must respond to it within 90 days, while the Financial Conduct Authority has announced a market-wide inquiry. Even Prime Minister, Theresa May has now pledged to “take action” against companies employing "unfair" pricing practices.

Citizens Advice’s complaint and the report that preceded it do not make comfortable reading for an industry already suffering from an image problem.

“This is, in effect, a systematic scam: nobody would choose to pay such higher prices - companies charge these prices solely in the hope that people won’t notice. The scale of this rip-off is vast - billions of pounds, typically taken from vulnerable consumers, undermining people’s faith in markets,” the report stated.

The “loyalty penalty” is costing the public a total of £4.1bn a year across the five markets. A customer could be paying £877 every year from not switching, according to Citizens Advice’s research. Meanwhile, 89% of consumers surveyed by the body believe that loyal customers should be paying the same as or less than new ones.

The elderly, those with mental health problems, those on a lower income and those with lower levels of education are more likely to be affected, Citizens Advice found.

History of super complaints


Private dentistry market
Which? to Office of Fair Trading


Doorstep Selling
Citizens Advice Bureau


Mail consolidation
Postwatch to OFT (not progressed)


Care home sector
Which? to OFT


Northern Ireland Banks
Which? to Competition Commission


Payment Protection Insurance
Citizens Advice Bureau to OFT


Energy billing
Energywatch to Ofgem


Credit Card Interest calculation methods
Which? to OFT


Restrictions on business structures & direct access in the Scottish Legal Profession
Which? to OFT


Supply of beer in UK pubs
Campaign for Real Ale to OFT (no action taken)


Consumer Focus to Financial Services Authority


Credit and debit surcharges
Which? to OFT


Travel Money
Consumer Focus to OFT


Misleading and opaque practices in the grocery market
Which? to Competition and Markets Authority


Compensation arrangements in the market for passenger rail services
Which? to Office of Rail and Road


Consumer safeguards in the market for push payments
Which? to Payment Systems Regulator


Excessive prices for disengaged customers
Citizens Advice to CMA

What is a super complaint?

Since legislation was introduced in 2002, 17 complaints have been made. Previous super complaints have had mixed outcomes.

Investigations into the payment protection insurance mis-selling scandal that gripped the banking industry were sparked by a 2005 super complaint by Citizens Advice. Lloyds Bank was hit with a record £117m fine in 2015. Clydesdale Bank took a £20.6m hit. CT Capital was fined £2.4m and the Co-operative Bank faced a fine of £113,300. PPI reimbursements have totalled £32.2bn as of July this year, with many consumers owed thousands of pounds.

At the other end of the spectrum, super complaints can be thrown out without any action taken. The now defunct Office of Fair Trading took no action following a review into the Campaign for Real Ale’s 2009 super complaint on tied leases.

Fairer Finance managing director James Daley launched a super complaint into unfair card surcharging practices in 2010, while he was at Which?.

Reflecting, Daley said: “We levied our super complaint and the OFT decided it was a reasonable issue. What came out of it were regulations saying you could only pass on the cost of the transaction to customers. What that did was do away with debit card surcharging pretty much entirely, because everyone was forced to admit that the cost was pretty much negligible.

“But in terms of credit card charges, they stayed in the region of 2% to 2.5%. We were pretty sure that they were overcharging but, of course, the regulations had been written quite loosely and so it was easy for them to say: ‘Well, you didn’t say what counts as a cost, so we’ve added in a bit of the staff canteen and staff Christmas party.’ The trading standards never enforced against those rules and so companies like Ryanair continued to get away with it. Eventually the rules came through from Europe, which banned surcharging altogether and so that was the end of that.”

The Citizens Advice super complaint may struggle to progress, as it encompasses so many sectors, according to Daley.

He said: “I could imagine the CMA secretively rolling its eyes thinking ‘oh, this again’. It’s so broad. It makes it easier to say: ‘The FCA is already doing an investigation into the cash savings market, we only just looked at comparison sites and the impact they are having on pricing in insurance.

We have asked the FCA to look at it more deeply and they are launching a market enquiry into insurance anyway.’

“It’s highly likely that the CMA deflects the issue to other regulators, that are already doing various degrees of stuff. It may not achieve anything. Having said that, the FCA announced a full market enquiry into car and home insurance on the same day of the super complaint.”

Daley added: “Insurance is probably the one [of the sectors referred to in the complaint] potentially with the biggest detriment. Just looking at loyalty pricing would be to miss the elephant in the room. Insurance pricing as a whole is broken and delivering poor customer outcomes and we need a social and policy debate about what is a fair way to price insurance.”

By sector

On average, the “loyalty penalty” for home insurance customers is £13 at the first renewal compared to when it is first bought, according to the super complaint. It is the lowest of the sectors named in Citizens Advice’s complaint. The worst offender is mobile, at £264 including payments towards the mobile phone.

There are 17.3 million households affected by dual pricing in home insurance, at a cost of £708.5m. Home insurance loyalty pricing affects the most households, while the broadband sector was the worst culprit for cost, at £1.3bn. Broadband is closely followed by the savings sector, at £1.1bn.

Consumer Intelligence managing director, Ian Hughes said: “The insurance industry is really beating itself up over this. But the truth is if you measure what’s going on in some of those other sectors, insurance is not nearly as bad as those other sectors. Now that does not let insurance off the hook, I want to be really clear, that doesn’t mean to say you can’t deal with it.”

Home insurance may be named on the super complaint, but other personal lines insurance such as motor could also come under scrutiny.

KPMG director of general insurance James Hillon said: “A number of personal lines products such as motor insurance also exhibit that characteristic of new business pricing tending to be a bit lower than renewal pricing. The thing that makes home insurance stand out is typically there are higher levels of retention. It doesn’t surprise me that home insurance is the poster child for the issue.

“It is not the only product that insurers will have to think carefully about as they consider their responses to whatever intervention comes.

“It would not surprise me if the study then leads to action. What is interesting about the FCA is typically when it comes to price intervention, it has not been overly active,” he added.

The industry has taken some steps to address dual pricing. Customers must now be informed of the previous year’s price at renewal, a rule enforced by the regulator. However, the FCA was forced to issue a second warning in April this year, as some firms were failing to keep to the rules.


In May, the British Insurance Brokers’ Association and the Association of British Insurers launched a set of Guiding Principles and Action Points. Members will use the guidelines to set targets and ensure that price differentiation is not “excessive”. Due to competition law and differences between firms, they must set these targets for themselves.

ABI director of general insurance policy, James Dalton said: “We’ve taken voluntary industry-led action on dealing with vulnerable consumers at renewal. Earlier this year we took voluntary industry-wide action by launching the GPAPs.

“Do I think it’s a surprise? No. Do I think it’s a shame that we were lumped in with those other sectors? Yes, because we’ve got a demonstrable track record as an industry of leaning in to a challenging problem and taking meaningful action to deliver meaningful change.”

The issue can be less marked for brokers, who often shop around at renewal to get the best deal for a client.

“Those GPAPs and matching points follow on from what the FCA did last year about making it a requirement to disclose last year’s price on the renewal documentation. That’s already had some positive effects. People can identify if there has been a marked change,” Graeme Trudgill, executive director of Biba, said. “What we did in May with the ABI was very important for both organisations. We expect to see a marked improvement in the outcomes for our longstanding customers.”

“We appreciate what the regulator and Citizens Advice have been saying about dual pricing. Many of our members find dual pricing very challenging. When it comes to renewal, if the price is so different from when it was new business last year it is a difficult conversation to have with the client.”

Market shift

Action from the regulator could lead to a market shift. Insurers with historic books of business built from when home insurance was bundled with mortgages could be set to suffer most, sources suggest, as well as those who have less of a strategy or appetite for attracting new customers.

Any enforcement must be tempered if it will lead to the right outcome for consumers.

Hughes warned: “Almost every single time a regulator has stepped into a market like this, like Ofgem coming in putting in a cap on the standard rate tariffs in energy, they don’t necessarily create the right consumer outcomes. What happens when you set a cap on the standard rate tariff, is every single provider increases its tariff to the cap. There is no incentive to compete.

“My biggest concern is that the regulator gets involved, it makes a sweeping change, and that change doesn’t create the outcome that Theresa May would want for voters. Instead it creates completely the reverse outcome.”

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