Citizens Advice supercomplaint to the CMA - update

[Legal Beagles]

The Competition and Markets Authority (CMA) published its response to the Citizens Advice supercomplaint on the loyalty penalty in December 2018, making several cross-cutting and market-specific recommendations in the mortgages, cash savings and home insurance markets. Today it has published an update on progress against its recommendations.

https://www.fca.org.uk/news/news-sto...int-cma-update

[Amethyst]

Update doc https://assets.publishing.service.go...019_31916_.pdf

Progress in tackling the loyalty penalty

• Work by regulators is underway in the five markets to look in more detail at the problems and how they can best be tackled; key decisions are due shortly. While it is too soon to assess progress, we expect regulators to take firm action where problems are found.

• We have launched two enforcement cases investigating harmful business practices and we are progressing other cross-cutting areas of work.

• We have set out a framework which gives clarity to businesses about the difference between healthy competition and unacceptable practices, alongside proposals to strengthen consumer law.
• Work by regulators to look at publishing loyalty penalty metrics is underway; but more must be done to take this forward.

• Work on measures such as the use of Smart Data in key markets to tackle loyalty penalty issues is ongoing, and government is consulting on this.

• We will reconsider progress and publish a further update by the Introduction

[Amethyst]

30. The following new refined framework sets out the conditions for healthy competition and acceptable behaviour by firms. It provides six key principles which if followed will help prevent customers from being hit by the loyalty penalty.
Practices should be transparent and never misleading:
1. Auto-renewal must be explicitly agreed to by the consumer when signing up; not applied on a default basis and consumers should be able to take the contract without auto-renewal;
2. Consumers are properly notified before any renewal - in good time for them to take action;
3. Changes to price, the product or other important terms must have the consumer’s express agreement.
It should be as easy as possible to opt out:
4. It should be at least as easy to exit a contract as it was to sign up, including being able to easily stop the renewal at any time, exit in the same way as it was signed up to and a cancellation right after renewal that is easy to exercise.
The behaviour being encouraged is in the consumer’s best interest:
5. Minimum terms are restrained and no longer than justified and
beyond that refunds are given if consumers cancel early;
6. No auto-renewal onto a fresh fixed term, unless it is clearly in consumers’ interests, and exit fees should not be used after any initial minimum term.