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Citizens Advice to Financial Conduct Authority’s announcement on insurance market

4 October 2019

Gillian Guy, Chief Executive of Citizens Advice, said:

“Last year we submitted a super-complaint showing loyal customers are being penalised hundreds of millions of pounds a year on their home insurance alone.

“It’s great to see the FCA acknowledging that the insurance market isn’t working for consumers and pledging to crack down on the loyalty penalty.

“We’re especially happy to hear the regulator say that everything is on the table to make sure customers are getting a fair deal. This includes tackling gradual year-on-year price increases and making companies automatically switch their customers to better deals.

“At the moment these are just proposals. The FCA must now follow through on these bold ideas to stop loyal insurance customers being penalised.”

Paul from Staffordshire, came to Citizens Advice for help after finding his mother-in-law’s buildings and contents insurance was £800 per year. He said:

“I was shocked when I saw that she was paying £800 for her home and contents insurance. She lives in a small mid-terraced house - it’s nothing fancy. I couldn’t believe that that was the right price.

“I went on an online insurance comparison site and did a few different searches with different types of cover. It always came out at around the £300 mark or lower. My heart sank when I realised that she had been with the same company for over five years. 

“She is an 89-year-old lady and doesn’t have the capacity to sort all of that out herself. I feel like she’s been cheated. And I think it seems like common practice, to rip off the people who are most vulnerable.”

Paul has put in a complaint to the Ombudsman and is waiting to hear back.



Citizens Advice submitted a super-complaint on the loyalty penalty - in the mobile, broadband, home insurance, mortgages and savings markets - to the Competition and Markets Authority (CMA) in September 2018 calling for it to consider how the problem can be fixed. The CMA’s response to the super-complaint, in December, said it agreed and had found damaging practices by firms which exploit unsuspecting customers. The CMA said it wanted to see urgent action.

Research submitted as part of the super-complaint found that across five essential markets (mobile, broadband, home insurance, mortgages and savings): 

  • British consumers lose around £4 billion a year to the loyalty penalty (or £11 million a day).

  • Eight in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

  • The loyalty penalty for home insurance is £708m each year

This is the fourth super-complaint Citizens Advice has made since being given the power in 2002. Its super-complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £36 billion returned to customers in refunds and compensation so far.

Notes to editors

  1. The loyalty penalty super-complaint can be found here.
  2. The Competition and Market Authority’s press response to the super-complaint can be found here.
  3. The Loyalty Penalty Cross Sector Report can be found here.
  4. The press release that finds that home insurance companies make 100% of their profits from the loyalty penalty here.
  5. The PPI figure is sourced from the FCA
  6. Citizens Advice includes the national charity; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
  7. Citizens Advice is the statutory consumer advocate for energy and post. We provide supplier performance information to consumers and policy analysis to decision makers.
  8. The Citizens Advice Witness Service provides free, independent support for prosecution and defence witnesses in every criminal court in England and Wales.
  9. Citizens Advice offers Pension Wise services at 500 locations in England and Wales.
  10. Citizens Advice’s services are free, independent, confidential and impartial, and available to all regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  11. To get advice online or find your local Citizens Advice, visit
  12. For consumer advice, call the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 to talk in Welsh.
  13. We helped 2.6 million people face to face, by phone, email and webchat in 2017-18. For service statistics see our monthly publication Advice trends.
  14. Citizens Advice staff are supported by over 23,000 trained volunteers, working at over 2,500 locations in England and Wales.