The Competition and Markets Authority today issued their initial response to the super-complaint lodged by Citizens Advice. Whilst the super-complaint looked at 5 markets, our focus is on the insurance element. It is however interesting to note that the CMA draws many parallels between the behaviours in different markets and the financial services sector would be well advised to keep a broad view of the horizon in seeking to anticipate what might be expected of them by the FCA.

In effect, today’s announcement from the CMA has confirmed that they agree with the issues alleged by Citizens Advice. They have set out a package of reforms – broad reforms aimed at all 5 of the markets and specific ones aimed (at least in the words of the CMA) at the household insurance market. The CMA believe these will achieve real changes and help existing customers get a fair deal.

The CMA have recommended 8 key reforms, including recommendations to government, regulators and itself. The Financial Conduct Authority’s (FCA) own response has been swift.

In their response to the CMA report, the FCA have welcomed the findings and noted the work they have already started on general insurance pricing practices – a reminder that the FCA work goes beyond the scope of the original super-complaint which was limited to household insurance. They have made a commitment to continue to engage with the CMA as they consider how to act on its recommendations.

The FCA also notes that they are already looking at how to improve outcomes for consumers, including those who are long-standing. They make it very clear that they “will consider all options to achieve this, including price interventions where appropriate.”

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, commented:

“The treatment of long-standing customers remains a priority for the FCA. We have worked closely with the CMA since they received the super-complaint. We will continue to do this. It is important that this issue is tackled and harmful practices are stopped.

We expect firms to look after the interests of all customers and treat them fairly, whether they are new or longstanding. Where we have concerns about conduct by firms, we will explore all options to address this using the full range of our powers.”

It is clear to us that this is an issue the FCA will be putting considerable focus into in 2019 and we reiterate our 5 recommendations to financial services firms in our original article on the Super-complaint:

  1. First and foremost, don’t be caught napping. If the governance of your pricing is not as good as it could be, get it in order now.
  2. Second, review your pricing outcomes. If your firm does have differentials in pricing between longstanding customers and new customers decisions will need to be made as to how you approach resolving the issue and justifying the position you have or any changes you adopt.
  3. Third, consider what data you have which the FCA may request and how you may be able to structure it to be presentable.
  4. Fourth, consider undertaking a survey of your longer standing customers asking them why they have remained loyal.
  5. Fifth, if you are not the manufacturer and/or do not set the pricing on the products you distribute contact the product manufacturer and speak to them about what they are doing.

You can read the original article, and recommendations, in full here: Super-complaints, The FCA And The Problem With Pricing In Financial Services

With the CMA and FCA both coming out strongly in support of the allegations made in the original super-complaint and indicating their continuing commitment to drive this work forward to maintain momentum and ensure changes are achieved, this is an issue financial services firms need to take seriously. If you would like to have a confidential discussion about the issues and how your firm responds, please get in touch with myself or Jason Jones.


Kenneth Underhill
Implement Compliance Solutions and Resources

Advisory | Resourcing | Training