FCA update on Citizen’s Advice super-complaint

Jun 21st '19

This week, the Financial Conduct Authority (FCA) issued a response to the CMA’s update on the Citizens Advice super-complaint about customer loyalty pricing.


What was the complaint about, and what have the CMA and the regulator said in their updates?


What was the Citizens Advice super-complaint about?

The super-complaint was issued in September 2018. It followed research from the charity showing that customers who stay loyal to their providers are losing out on over £4 billion a year.


The complaint was based on research carried out by Citizens Advice across the mobile, broadband, home insurance, mortgages and savings markets. It found that the so-called ‘loyalty penalty’ is disproportionately paid by vulnerable consumers, such as older people and those with mental health issues.


You can read more background in this blog when the super-complaint was made.


How did the CMA respond?

In December 2018, the CMA responded to the super-complaint, setting out a package of reforms. These covered the five sectors highlighted by Citizens Advice as well as the wider market. At the same time, the CMA launched investigations into the anti-virus software market, the first step in its wider programme of enforcement in this area.


What is the FCA doing as a result?

The financial regulator’s update details the action it has taken to respond to the super-complaint, and how it is working with the CMA to address the issues raised.


The FCA’s update points out that it had already started work in the mortgages, cash savings, and the home and motor insurance markets before the CMA lodged its super-complaint.


The financial regulator has long focused on the fair treatment of customers. It had also already criticised insurers for their inadequate renewals communications, and in its 2018-19 Business Plan had announced plans to examine the pricing practices among general insurance firms.


Fair treatment of existing customers is also identified as a priority in its 2019-20 Business Plan.


Currently, the regulator has:


  • Completed its mortgages market study, and is progressing a number of remedies, including research to understand the characteristics of consumers who do not switch.
  • Announced, in May, next steps in its work on price discrimination in the cash savings market, on which the FCA will publish a feedback statement or consultation paper by the end of 2019.
  • Started work on its Market Study into general insurance pricing practices in home and motor insurance, interim findings of which are due to be published this summer.


It is also working with the CMA, the UK Regulators Network (UKRN) and other regulators on the cross-cutting recommendations (i.e. recommendations that cut across sectors), where its regulatory approach will include:



Work on performance scorecards and the potential publication of price differential metrics will form part of this.


The regulator also continues to tackle the potentially harmful business practices highlighted in the CMA’s work, via its usual supervisory approach, which might include visits to non-compliant firms.


Other workstreams will also feed into the FCA’s work to address the super-complaint issues, including:


  • Interventions to prevent harm, including work in the high-cost credit sector to reform overdrafts and other forms of high-cost credit.
  • Evaluating the effectiveness of its interventions, for example, its work on the rules introduced to increase transparency and engagement at renewal in general insurance.


How can you ensure your own approach is up to scratch?

The FCA’s and CMA’s ongoing work on this will doubtless lead to further scrutiny and new regulatory requirements.


In the meantime, though, there are some steps you can take to make sure your treatment of loyal customers follows best practice.


  • Brush up on the FCA’s rules on treating customers fairly.
  • Familiarise yourself with FCA requirements around renewals communications.
  • Ensure all communications are reviewed by your Compliance team, which should pick up on any wording or practices that don’t meet regulatory standards.
  • Consider automating elements of your review and approvals processes, to mandate Compliance team sign-off and ensure nothing non-compliant slips through the net.


We will update in future on any further developments in the Citizens Advice super-complaint and the CMA’s and FCA’s responses.


To find out more about the benefits of automated workflows for Compliance teams, and how it can help to develop more robust compliance processes, please contact us.


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