FCA urged to take action on loyalty penalties

Commenting on today’s update, Christopher Woolard, executive director of strategy and competition at the FCA, said: "Before the CMA published its super-complaint response last year, we had already begun work in the mortgages, cash savings and general insurance markets. 

"Ensuring that markets work well for longstanding and vulnerable consumers continues to be a priority for us and the loyalty penalty is a serious issue. We will continue to work closely with the CMA and other regulators on the recommendations relevant to us."

Yesterday prime minister Theresa May confirmed the government’s intention to give the CMA "judge and jury" powers to impose fines on companies that overcharge or mislead customers.

Mrs May said big companies were "getting away with harmful trading practices" and that the government would strengthen the sanctions available to deal with this. The powers had been proposed back in February.

Ishaan Malhi, chief executive and founder of online mortgage broker Trussle, said the government’s announcement was a step in the right direction.

He added: "The loyalty penalty is something we’ve seen a lot of in recent years, yet the lack of action from the industry and the regulator is disappointing. 

"All too often, homeowners are unaware that they’ve slipped onto their lender’s SVR, meaning they’re subject to high interest rates. Enough is enough. 

"The CMA should be granted intervening rights sooner rather than later, to prevent homeowners from being trapped in the same costly situation."

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