Citizens Advice reports 1 in 7 people still overpaying four years on

Citizens Advice published a report on 1 August 2022 finding that 1 in 7 people are still overpaying for their mortgage, broadband or mobile contracts, and called on the Financial Conduct Authority and Ofcom to act¹. The charity said it first raised the issue of the loyalty penalty, which it describes as the practice of overcharging customers who do not switch deals regularly, in 2018¹.

It said it had submitted a super-complaint to the Competition and Markets Authority after finding that consumers were being overcharged by £4bn per year for essential services¹. Four years on, it said progress had been made in some markets but that overpaying continued¹.

"Since then progress has been made in some markets, but we've found that 1 in 7 people are still overpaying for their mortgage, broadband or mobile contracts."

Citizens Advice, Overcharging consumers in a cost-of-living crisis: The loyalty penalty 4 years on¹

The report sets out three areas where it wants regulators to act¹:

Market	Action Citizens Advice calls for
Mortgages	The FCA should explore alternative models to high Standard Variable Rates at the end of fixed terms, so that consumers are not overcharged for their mortgages¹
Mobile	Ofcom needs to work with firms to end the practice of charging customers for mobile handsets that they already own¹
Broadband	Ofcom should take further steps to make sure no loyal customers overpay for their broadband¹

Citizens Advice said it was unacceptable that consumers were still being charged the loyalty penalty, which it said was costing millions that could help them manage soaring energy bills or put food on the table¹. The report was published during a cost-of-living crisis, with the charity framing the overpayments as money that could otherwise go towards energy bills or food¹.

The report does not give a breakdown of the 1 in 7 figure by market, and no figures for average overpayments in each of the three markets are included in the published summary¹. The £4bn annual figure relates to the 2018 super-complaint and covers essential services generally, not the three markets named in the 2022 finding¹. No response from the FCA, Ofcom or the CMA to the 2022 report is included¹.

Why it matters for households

The finding covers people with a mortgage, a broadband contract or a mobile contract who are out of an introductory or fixed deal and have not switched¹. For mortgage borrowers, the concern raised is the rate charged once a fixed term ends, which the report links to high Standard Variable Rates¹. For mobile customers, it is being charged for a handset they already own¹. For broadband, it is loyal customers paying more than new ones¹.

The report does not say how much any individual household is overpaying, nor which providers are involved¹. It also does not set out a timetable for the changes it seeks, so no date is given for when any of the three markets might change¹. The charity's role in representing consumers alongside other bodies is covered in our guide to who speaks for consumers, and complaints about financial firms that cannot be resolved directly fall under the Financial Ombudsman time limits.

What happens next

Citizens Advice has asked the FCA to explore alternative models to high Standard Variable Rates at the end of fixed terms, and Ofcom to work with firms on mobile handset charging and to take further steps on broadband¹. Neither regulator has responded in the report, and no dates for consultation, rule changes or reviews have been reported¹.

Sources1 cited