CMA loyalty penalty: Martin Lewis says "targeted price caps protect the most vulnerable"
The Competition and Markets Authority (CMA) has released a series of recommendations to tackle the so-called ‘loyalty penalty’ – the amount a customer loses staying with the same provider year after year – after a Citizens Advice super-complaint called for it to take action to stop people being exploited.
Martin Lewis, founder of MoneySavingExpert.com said: “The CMA has rightly recognised that if we are going to stick with a competitive market, we need to decide who is and who isn’t an acceptable victim of it.
“In a competitive market, some people will, by definition, pay more than others for the same thing. The problem comes for those who are unable to engage in competition, because they are vulnerable, information disenfranchised, not on the internet or simply bureaucratically unable to switch. They are the ones who need protection. If I – as someone who is web-savvy, affluent and financially informed – chooses not to switch, that’s my problem. If a struggling 90-year-old who’s not on the web can’t, the market needs fixing.
“So we are pleased to see the CMA rightly talking about targeted price caps, not blanket price caps. A blanket cap leaves you stuck in a halfway house – a hodgepodge – between competitive prices and price regulation, where we simply tell companies what they can charge. Yet targeted price caps protect the most vulnerable in our society.”
MoneySavingExpert.com has covered today’s recommendations in its news story.