The government has unveiled plans to fine companies that overcharge or mislead customers.
The government has announced that it will begin a period of consultation on giving the Competition and Markets Authority powers to decide if consumer law has been broken. It will be able to fine companies directly, rather than going through court, as is now the case.
It is intended to act as a deterrent to companies which harm consumers with misleading claims, unfair terms and conditions, or hard-to-exit agreements. The government will also legislate to give regulators such as Ofcom, the FCA and Ofgem new powers to stop loyal customers paying over the odds for their loyalty.
Prime Minister Theresa May said:
“For far too long, many big companies have been getting away with harmful trading practices which lead to poor services and confusion among customers who have parted with their hard-earned cash. The system as it stands not only lets consumers down but it also lets down the vast majority of businesses who play by the rules. It is high time this came to an end and today we are confirming our intention to give much stronger powers to the CMA, to strengthen the sanctions available and to give customers the protection they deserve against firms who want to rip them off.”
The proposed measures come as the government publishes a clear and direct response to the recommendations by the CMA on the Super Complaint on consumer loyalty brought forward by Citizens Advice.
According to Citizens Advice research, customers who stayed loyal to their mobile and broadband providers, or to those providing financial services like savings, mortgages and insurance, were paying as much as £1,000 a year more than serial switchers – a total £4 billion overpayment across these sectors.
False reviews and enforcements, excessive holiday cancellation fees and unfair care home charges are all areas where the Competition and Markets Authority has acted to protect consumers recently.