Citizens Advice supercomplaint to the CMA - update

The Competition and Markets Authority (CMA) published its response to the Citizens Advice super-complaint on the loyalty penalty in December 2018, making several cross-cutting and market-specific recommendations in the cash savings, home insurance and mortgage markets. We update on our work in these areas.

Ensuring that markets work well and provide fair outcomes for longstanding and vulnerable consumers continues to be a priority for us. This means making sure that consumers receive good value products overall. Price is an important aspect of competition, but we also want to see firms offer good quality products that perform as consumers expect them to. We expect firms to look after the interests of all customers and to treat them fairly. Where we have concerns about conduct by firms, we will explore all options to address this using our full range of powers.

We have worked closely with the CMA since they 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 current position on our work is:

Cash savings

Today we have published a Consultation Paper on new rules to require firms to pay their customers single rates for easy access cash savings and Individual Savings Account (ISA) products no later than 12 months after the account is opened. Our proposal for a Single Easy Access Rate (SEAR) is designed to address the concerns identified in our cash savings market study by simplifying the market for consumers and increasing competition between firms.

We propose to introduce rules that would ensure all consumers benefit from competition, by reducing the number of interest rates offered on easy access savings accounts.

Firms will continue to be able to compete on price for new customers by offering introductory rates as they already do. However, a simpler, clearer market where savings accounts are easier to compare will ensure that consumers are clear about what their account will offer them over the longer term. It will help consumers make better decisions about whether to keep their savings where they are or switch. We expect these changes will result in more consumers receiving better, more competitive rates on their savings.

Our consultation is open until 9 April 2020. We will assess responses and publish our next steps later this year.

Home and motor insurance

Our interim market study report on general insurance, published in October 2019, looked at pricing practices for home and motor insurance. We found that these markets are not working well for all consumers. While many people shop around, many loyal customers are not getting a good deal. We believe this affects around 6 million consumers, who would have saved £1.2 billion if they had paid the average for their risk.

We continue working to address the problems uncovered including getting firms to improve oversight of pricing practices and make improvements in product oversight and governance.

We are also considering a range of industry-wide measures to reform these markets so they work well for consumers in the future. These measures would tackle high premiums for consumers, stop practices that could discourage switching, make firms be clear and transparent in their dealings with consumers.

In the longer term, they would use make best use of innovation so that general insurance markets benefit from technological developments including Open Finance. We intend to publish a final report and consultation on remedies in quarter 1 2020.

We also published an evaluation of our general insurance renewal transparency intervention alongside the interim market study report. This report looked at home, motor and pet insurance and found that consumers save an average of £185 million per year as a result of our intervention. 


In March 2019, we published the Mortgage Market Study Final Report, and recently announced changes to our responsible lending rules and guidance. This will help remove barriers to consumers switching to a more affordable mortgage and reduce the time and costs of switching for all relevant consumers.

We also expect to shortly finalise changes to our sales standards rules and guidance. This should enable firms to develop new tools to make switching easier.

Alongside this, we have recently completed detailed research to understand characteristics of consumers who do not switch. We are currently considering the case for potential remedies.

Cross-cutting FCA work

We have identified potentially harmful business practices that were also highlighted in the CMA’s work, and we are tackling these through our supervision of firms. This includes identifying firms creating unreasonable barriers to cancellation, where we have intervened to ensure that processes are changed to allow customers to switch providers more easily.

We have also worked with firms to ensure they have been transparent with customers around how policies will automatically renew. Since the introduction of the Insurance Distribution Directive last year, we have taken action to improve the way firms design and sell products, and on their culture in order to increase the focus on good outcomes for consumers.   

We are also considering our future approach to cross-cutting issues to inform how we regulate and supervise firms to improve outcomes for consumers. This includes our work on firms’ responsibilities to consumers and what this should look like in future.

This work is being carried out alongside our approach to fair pricing in financial services and our current consultation on Guidance for firms on the fair treatment of vulnerable customers.

We plan to publish updates on both workstreams in quarter 1 2020. This work is part of our wider strategic priority to develop our future approach to regulation.

In addition to this, we have recently published a call for input on the future role of Open Finance and how this can be used to spur innovation and improve consumer outcomes across markets. We are working closely with the government on this as it progresses its Smart Data initiative.

Work with other regulators

We are also working closely with the CMA, UK Regulators Network (UKRN) and other regulators on the case for potential cross-cutting remedies. This includes performance scorecards for personal current accounts.