Proposed new powers for the Competition and Markets Authority aim to bolster competition and put consumers more directly at the heart of the CMA’s work.
The package of proposals out yesterday (February 25) is designed to allow the CMA to intervene "earlier and more robustly" on behalf of the consumer and include a new new statutory duty to increase the speed of the CMA’s investigations and powers to act against firms supplying misleading information.
The proposed reforms also include a new statutory duty on the CMA and courts applying competition and consumer laws to treat the interests of consumers as "paramount" in their decision making.
The proposals were the CMA's response to a request from business secretary Greg Clark last summer to review the current system.
The CMA stated its work was often "slowed by a complex web" of laws accumulated over decades, an issue it said was exasperated by today’s "digital economy and increasingly fast paced markets".
Andrew Tyrie, chairman of the CMA, said: "The UK is an excellent place to do business, one in which innovation and dynamic companies can thrive.
"But the growth of new and rapidly emerging forms of consumer detriment, partly caused by digitisation, and the public’s increasing doubt about whether markets work for their benefit, both now require a response."
Mr Tyrie said the UK had an "analogue system" of competition and consumer law in a digital age.
He said: "Reform is essential. Hence these far reaching proposals, which will enable the CMA to act more rapidly, and put the consumer first, so as to make the CMA more effective in the third decade of the 21st century."
Gillian Guy, chief executive of Citizens Advice, said the reforms had the potential to be a "huge step forward" for consumers.
She said: "As our super-complaint to the CMA made clear, for too long the the balance of power has been tipped in favour of business not consumers.
"The proposals could unshackle regulators and give them the authority they need to better protect consumers by putting their interests first."
But Ms Guy urged regulators to act quickly to protect consumers from the industry’s ‘loyalty penalty’, the practice of charging longstanding customers more than new clients.
She said: "Regulators must not sit on their hands as they wait for new laws to be passed.
"They must use their existing powers to stop the most blatant rip offs such as the loyalty penalty and overcharging vulnerable consumers."
The 'loyalty penalty', which was also identified by the Financial Conduct Authority in its work on the retail banking market and mortgage clients, is the practice of offering new clients better deals than loyalty customers.
Last year Citizens Advice launched a super-complaint with the CMA calling for the 'loyalty penalty' currently paid by consumers in the mortgage market, and others in the financial market, to be remedied.
In response the CMA called on the Financial Conduct Authority to find out more about mortgage customers who could switch onto a better rate but do not.
In January the regulator announced it would consult on changes to its responsible lending rules in an effort to help free mortgage prisoners stuck in higher cost deals.
rachel.addison@ft.com
