Press Release: Don't rely on consumers to boost competition says Panel

Research published today by the Financial Services Consumer Panel shows that financial services firms capitalise on retail consumers’ behavioural biases.  Firms appear to compete vigorously, but they strive to inhibit consumers’ ability to shop around, by developing complicated products, with obscure or misleading prices and terms and conditions.

While competition authorities have begun to realise this, they still rely too much on active consumer engagement to drive competition. This won’t work because the number of engaged consumers is not large enough to drive competition or to make firms change their behaviour, and even those who are engaged can’t usually assess whether switching would get them a better deal.

This highlights the scale of the challenge to competition authorities: firms will continue to exploit loyal customers if information remedies and a reliance on switching are the only proposed solutions.

To remedy this, the Panel calls in its position paper for:

  • Competition authorities to take robust and effective action to tackle firms’ exploitation of consumers’ behavioural biases and over-complicated products and pricing.
  • The FCA to be tough on firms that penalise their loyal and trusting customers.
  • The FCA to develop robust measures of consumer outcomes, and require firms to make these widely available, and incorporate them in digital comparison tools.
  • Competition authorities and regulators to act now to make sure the new generation of automated shopping around and switching services do not simply repeat the problems of the past and further weaken rather than strengthen consumers’ position in the financial services market.

Sue Lewis said “Financial services firms exploit their customers’ inertia and misplaced loyalty. Simply telling people this and encouraging them to go elsewhere is not going to work for most consumers. Firms will only change their behaviour when they have an incentive to do so. Competition authorities need to analyse what works: what needs to happen for people to know they can switch to a better product or service? What remedies should be put in place to protect those who, perfectly rationally, do not want to switch? The fiction that consumers can and will drive competition has persisted too long. We need tough action now.”



Vincent Paulger (Consumer Panel) 020 7066 9346



  1. The Consumer Panel is a statutory body under the Financial Services Act 2012.  The Financial Services Authority originally established it in December 1998. The Panel advises the FCA on the interests and concerns of consumers. 
  2. The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues. 
  3. The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available on its website: or via its LinkedIn and Twitter accounts.
  4. The research report completed by Jonquil Lowe at the Open University on behalf of the Panel is titled ‘Consumers and competition: delivering more effective consumer power in retail financial markets’ and can be found  here.
  5. The Panel’s position paper ‘Consumers and Competition’ can be found here.

Sue Lewis (Chair)

Dominic Lindley

Caroline Barr

Kitty Ussher

Teresa Fritz

Pamela Meadows

Liz Barclay

Faith Reynolds

Mark Chidley

Jeff Salway

Sharon Collard

Doug Taylor

Jennifer Genevieve

Angela Roberts