Since Citizens Advice raised a super-complaint to the UK’s Competition and Markets Authority (CMA) in 2018 over the ‘loyalty penalty’ faced by millions of financial services customers, the Financial Conduct Authority (FCA) has been working tirelessly to tackle this. Financial services aggregator GoCompare has also been involved in the consultation.
In a recent update on its response to the super-complaint, the FCA wrote: “We have worked closely with the CMA since it received the super-complaint and will continue to do so. Before the CMA published its super-complaint response last year, we had already begun work in the mortgages, cash savings, and the home and motor insurance markets. Several of our key cross-cutting projects are also designed to address the harms which are felt by groups of consumers impacted by issues in the CMA’s work.”
The full FCA update can be read here.
Commenting on the work that GoCompare has carried out in collaboration with the FDA, Lee Griffin, the CEO and one of the founders of GoCompare, said: “In our dealings with the FCA we have provided further insight into the problem of loyalty pricing and the barriers to greater switching and suggested a series of remedies to help tackle the problem. It will be almost 18 months since the super-complaint by the time we have a final report and then there will be a further consultation, so in the meantime, the only option is to continue encouraging people to take responsibility for switching and saving.”
GoCompare has also curated a five-point plan to improve insurance renewals, which Griffin asserts is the quickest way to improve the situation for millions of general insurance customers. “While auto-renewal has a bad reputation, it is there to ensure people aren’t left without cover or inadvertently break the law,” he said. “However, the renewal process should be reformed immediately and standardised to ensure that insurers treat customers more fairly.”
Griffin reasoned that, while these changes can’t solve all the problems caused by loyalty pricing in the insurance market, they could make a significant difference for millions of customers. “For real long-term reform,” he said, “we need to look to harness the benefits of innovation and, as a tech company, we will continue to work with the FCA and others on the possibilities offered by initiatives such as Open Finance. But in the short to medium term, we need simple, achievable actions and improving the auto-renewal process further would be a huge step.”