Prime Minister Theresa May has vowed to take action against companies that impose a “loyalty penalty” on customers.
The government will be enforcing a price cap on the energy sector from this winter, and May suggested that it would not stop there where it comes to addressing “unfair” pricing practices.
In her speech to the Conservative Party conference last Wednesday, May said: “Any other companies charging their customers a ‘loyalty penalty’ should know: we will take action.”
The Prime Minister, pictured, this weekend echoed her warning to companies, in an op ed in the Guardian.
“Free markets drive innovation, reward creativity and increase efficiency. But it is the job of government to make sure they work properly,” May wrote.
“So, where markets are failing consumers, we are stepping in to fix them. From this winter, our energy price cap will stop loyal customers paying unfair prices. Where other companies are charging their customers a ‘loyalty penalty’, we will take action.”
May’s pledge follows a super complaint launched by Citizens Advice, which has forced an investigation into dual pricing in home insurance. British consumers lose £4.1bn a year across a number of different types of products and services to the loyalty penalty, according to the consumer champion body.
The Financial Conduct Authority will be launching guidelines for an insurance market study into the practice in a few weeks’ time.
When contacted by Post, the Association of British Insurers pointed to an earlier statement it has released on dual pricing practices, in which ABI director general Huw Evans said: “In any market where there is regular switching and fierce competition for new business, good deals are available to those who shop around but this does mean long-standing customers can lose out.
“The insurance industry recognises this is a problem and earlier this year became the first and only sector to take voluntary, industry-wide action to tackle it. This includes commitments from firms to review premiums charged to customers who have been with them for five years, and the industry publishing a report on progress within two years.
“In a competitive free market, where three out of four people shop around, there is no easy fix available and these measures will take time to bed in. But we believe that these industry commitments are a positive step in tackling excessive premium differences that can unfairly penalise long-standing customers.”
Other services under scrutiny following the super complaint are mobile, broadband, mortgages and savings.
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