Following its last publication in January, the CMA has once again published an update on their investigation into the loyalty penalty, noting that its progress has been significantly impacted by COVID-19.
The report comments on the FCA’s research into mortgages which found that 10% of longstanding consumers don’t bother switching even if they could. The FCA found that these customers tend not to be vulnerable but do tend to be older than those consumers who do switch. The reasons given for not switching are (i) loyalty to their lender), (ii) thinking it’s too difficult or (iii) underestimating the benefits of switching.
Due to COVID-19, the plans to create new products (based on revised affordability criteria) for mortgage prisoners has been delayed so administrators now have until 1 December 2020 to contact relevant customers about switching options.
The update notes that the consultation on SEAR has also been extended to October because of COVID-19.
It further notes that the FCA’s final report on its general insurance pricing practices market study has also been delayed so the suite of remedies is still unknown.
In terms of next steps, the CMA plans to continue to review progress and provide a further update later this year/early next.