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New powers to stop the exploitation of consumer loyalty

The government has confirmed it will consult on giving the Competition and Markets Authority (CMA) new powers to decide itself if consumer law has been broken. Do you welcome the news?

We were pleased to see the government’s announcement that tough new powers for the competition watchdog to fine businesses directly who have broken the law could be on the way.

Which? News: how the new rules could protect you

We believe that action to impose fines on firms that harm consumers through excessive charges, misleading offers and confusing practice can’t come soon enough.

They should act not only as a deterrent, but as an incentive to give consumers a fair deal.

Much-needed new powers for the CMA and other regulators should also help to clamp down on the ongoing bad practice of excessive, so-called ‘loyalty penalties’, which cost consumers billions of pounds every year.

The government says that the new powers would allow the CMA to intervene earlier and more quickly to tackle failings by companies in relation to consumer law.

It would then be able to directly impose fines on those firms for poor business behaviour.

It’s hoped this will act as a powerful deterrent to firms who are engaged in bad practice. Other regulators, such as Ofcom and the Financial Conduct Authority, could also see their powers increased. Both regulators have also given an update on the actions to tackle the so-called ‘loyalty penalty’ in the telecomms and financial industries respectively.

Prime Minister Theresa May was quoted saying:

“For far too long, many big companies have been getting away with harmful trading practices which lead to poor services and confusion among customers who have parted with their hard-earned cash.

The system as it stands not only lets consumers down but it also lets down the vast majority of businesses who play by the rules.

It is high time this came to an end and today we are confirming our intention to give much stronger powers to the CMA, to strengthen the sanctions available and to give customers the protection they deserve against firms who want to rip them off”

We want to see companies not only being deterred by these prospective new powers, but using them as an incentive to give consumers fairer, and ultimately better, deals.

Do you want to see regulators with stronger powers to stop businesses from exploiting consumers? What more needs to be done to force companies to start playing by the rules, and obeying consumer law?


My son has just been told it’s time to renew his tenancy by his estate agent but has been told it’s going to cost £120 . He said with the new law for renters he didn’t have to pay any fees but has been told the law is only for new renters is this right . They have told him it’s a loophole in the new renters law . Why has this been able to happen. I told him to tell them he would move out and then apply again for the house only to be told if he does that he would loose the home he has rented for years as they would make sure he didn’t get it . This is so wrong

Just looked it up, your Son is right, tell him to stand his ground & refuse to pay fee and point out/mention, Landlords can be fined for DEMANDING SUCH – Tenant Fees Act 2019 The Ban on Fees appplies to new or RENEWED tenancies SIGNED on or after 1st June 2019 – see below for my source and extract – Gov.uk……….
The ban on tenant fees applies to new or renewed tenancy agreements signed on or after 1 June 2019.
The government guidance on the Act for tenants, landlords and letting agents helps explain how this legislation affects them. You might also find the ‘How to Rent’ and ‘How to Let’ guides useful.
The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy. Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs.

We need much stronger Regulations to stop Consumer-exploitative businesses, with funding for Enforcement by Enforcement Agencies and powers to not only heavily fine these businesses and their Directors and Owners, but also to compel/force compensation payments to the exploited Victims, with interest for delays in payments of both fines & compensation.

My first experience of exploitation by a company was when Abbey National (years before Santander took over) decided to reduce the interest rate on my account to 0.1% without informing me. That was in the days when interest rates were much higher than anything on offer today. Apparently my account was obsolete and I would have to switch to a similar account with a different name if I wanted a decent interest rate. It took years before companies let us know that interest rates would substantially decrease without action, but I can thank Abbey National for alerting me to the game.

I am fed-up with insurance companies hiking premiums for existing customers. Now that I am retired I have time to make arrangements to switch to another company, but I don’t like to see people, especially the elderly and the vulnerable, being exploited. I’m well aware that haggling can reduce premiums and nowadays have to claim that I want to leave my mobile phone provider – Vodafone – each year to prevent them hiking the cost of my SIM-only contract. I only do this because only one network provides a decent signal where I live and there have been problems with moving to a mobile virtual network operator that uses the Vodafone network.

Yes, I want to see regulators with stronger powers to stop businesses from exploiting loyal customers.

At least your renewal invitation will show what you paid last year, which is a step forward and something that could have been included years ago. I suggest looking at including breakdown cover in your car insurance. It’s likely to be cheaper than separate cover and the well known companies are very good at rewarding loyal customers with a price hike even when there have been now call-outs.

@gmartin, George, I hope you are with a Which? recommended insurer. I transferred to the NFU last year and was told there is a potential saving in a bonus as it is a mutual, and a discount on the premium annually. However, they rightly point at that the premium may increase prior to those deductions. I await the renewal with interest.

Which? have a recent feature on insurance premiums, https://www.which.co.uk/news/2019/06/car-insurance-premiums-jump-by-a-third-in-three-years/
explaining why “I do not expect to be paying more,” is a delusion. 🙁

I have been with NFU Mutual for several years for car and breakdown insurance and a couple of years for home insurance. I live within a couple of miles of one of their offices and call in to discuss my cover. The only problem has been that documents have twice failed to turn up and had to be reissued. I cannot blame NFU because the missing documents have turned up. I did query the wording relating to a loyalty bonus and a senior member of staff called to discuss this. I’m hoping that the wording will be different at the next renewal.

None of the Which? recommended insurers would offer me insurance for my last house, which was in a flood risk area, though it had never flooded.

My car renewal notice this year did include a note of last year’s premium, but it was in very small print and difficult to find. If I hadn’t known it should be there, I wouldn’t have found it. Unsurprisingly the new premium had gone up over 20%, I went elsewhere.

There are several reasons why consumers are being exploited. Customers being “loyal” for whatever reason is one of them.

Another reason as far as I’m concerned is complicated packages and rubbish search engines. If we must go through the rigmarole of searching for a new provider each year to keep our deals down (oh god, must we? Must we?), the process, which is made bewildering on purpose of course, must be made simple. Last time I looked at Which?’s system I didn’t find it particularly flexible either unfortunately.

I posted this in The Newsroom in response to a Which? Press release but maybe it would be better here as it is exploitation of customers.

Broadband price increases could cost nearly £200 each year

…….from February 2020, TV, mobile and home phone providers will all have to notify customers when their broadband contract is ending and inform them of their best deals available.

Companies may already be working around this if you have more than one product from them.

We have Sky Sat TV, landline and fibre broadband that we renegotiated last year. The discount on the broadband was maybe so good we didn’t realise the contract would be running a different length than the TV and landline.

Sky will not let you have broadband without also having your landline from them, and if you have SkyQ you might have to have the lot with them.

So we are in effect trapped, and no doubt there will be a hefty hike on our broadband soon. The only way to negotiate a better deal is to be tied into another contract.

Where customers have more than one product from providers, contracts need to run concurrently enabling customers to switch.

I helped my mother in law to renew her phone and broadband last week. She uses skype once a day to call abroad and does email and reads news headlines. She therefore does not need superfast broadband but does need a reasonable speed. A basic package from BT, (there is no cable near her), that guarantees a minimum speed that would fit her needs is not visible in the renewal suite on offer, nor could it be seen by the BT phone rep. She would have to cancel the whole contract and set up from scratch, and possibly be without a connection for several days which is not sensible for someone in their 80s.
We were forced to renew the package she had, superfast fibre 2, which headlines an average speed of 60mb but only guarantees about 15mb. Surely this is unfair?

Kate, on this page https://www.bt.com/broadband/deals/ BT offer standard (copper) broadband “BROADBAND Average speed 10Mb£29.99 a month, Includes BT line rental, 18 month contract, then £32.99 a month” and fibre “SUPERFAST FIBRE ESSENTIAL Average speed 36Mb £31.99 a month Includes BT line rental 18 month contract, then £37.99 a month.E

You can probably change your order given it was only last week and BT couldn’t see it (assuming it is available to you – check online).

As with so many of these debates, we should be careful what we wish for. Banning the ‘penalty for loyalty’ will only result in ‘banning discounts for new customers’. Will the price for existing customers reduce to that offered to new customers, or will the price for new customers rise to that for existing customers? Gosh, that’s tricky – I can’t think which way it might go. The same happened with energy companies being taken to task for offering online customers lower prices than paper-based customers. The online discounts disappeared, fancy that. Train ticket prices are going the same way: it’s far too complicated (I agree) so we’ll simplify it by banning split ticketing (guess what – lower prices become unavailable) or worse still by introducing demand- or fluid-pricing, an evil business model where what you pay is taken out of your hands and handed to algorithms. And so on.

Something better than this single-aspect tunnel-vision approach is needed. Saga’s £25 renewal fee is one ‘penalty for loyalty’ that does need to be stamped upon; as is this eternal encouraging of haggling that Which? and others espouse as being a good thing, when in fact it’s an appalling normalisation of barrowboy trading. But these targeted demands for a level playing field only levels prices up not down.

Is this not an example of Which? promoting something to the disadvantage of many customers?
As we first mentioned last week, Plusnet is offering £75 cashback to new customers who take out its ‘Unlimited’ broadband package through Which? Switch Broadband.

Unlimited offers average speeds of 10Mb and costs £18.99 a month with no upfront costs on an 18-month contract – which is a pound a month cheaper than if you go direct.

Why should going through Which? be cheaper than if I go direct?