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Author Archives: Oliver Domleo

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One-in-seven customers still paying the loyalty penalty despite cost-of-living crisis

Friday 05 August 2022

  • Citizens Advice says ‘no more excuses, no more delays’ after regulators found £1.3bn a year loyalty penalty for broadband, mobile and mortgages

  • Tackling the loyalty penalty could be worth over twice as much as October’s £400 energy grant or more than half the energy price cap

One-in-seven customers are still paying the loyalty penalty across the broadband, mobile and mortgages markets in the midst of a cost-of-living crisis, Citizens Advice has uncovered.

The charity found two fifths of people (41%) who are paying the loyalty penalty have struggled to sleep due to their finances. Three in 10 (28%) have already cut back on everyday essentials such as food and energy, and 65% are worried about keeping up with their bills.

Analysis of 165,000 budgets of people who came to Citizens Advice for debt help, found those with the lowest incomes spend almost double the proportion of their income on telecoms than the highest earners.

Now, Citizens Advice is calling on the regulators to finally tackle the loyalty penalty across the broadband, mobile and mortgages markets. It says no-one should be punished for being loyal in the midst of a cost-of-living crisis.

‘I’ve turned off my gas, I buy yellow-sticker food – but I’ve paid a £3,000 loyalty penalty’

Tracy, who is originally from the US, signed up to a £30-a-month package which included TV, landline, broadband and international calls in 2006. She relies on disability benefits.

In January this year she began working through her bills to see where she could save and was shocked to see her bill had increased to £80 over the years. She has now switched providers.

She said: “Everything is going up; gas, electric, food and I have a mortgage to pay. I shop late in the evenings to get yellow-sticker discounted food, I turned off my gas as I can’t afford to repair the boiler or use the heating and I don’t go anywhere other than my hospital appointments.

“When I asked my broadband provider why I wasn’t told about the increases, they said I should have checked my payments and contacted them to see if there was a cheaper deal.

“I need to be able to speak with my family as I can not afford to visit them, but new customers pay £50 less than me for the same deal.  I have paid nearly £3,000 more for being a loyal customer. How on earth can they justify me paying so much more – especially as I was with them for 16 years.”

The loyalty penalty: Four years since the Super Complaint 

In September 2018, Citizens Advice submitted a super complaint on the loyalty penalty, in the mobile, broadband, home insurance, mortgages and savings markets. By 2020, the sectors’ regulators had found a combined loyalty penalty of £3.4 billion every year.

In January this year, the Financial Conduct Authority (FCA) essentially abolished the loyalty penalty for car and home insurance, by banning price walking – gradual year-on-year price increases – and making companies automatically switch their customers to better deals. It has paused investigating the cash savings market.

But Citizens Advice is concerned that little meaningful action has been taken in the three other markets it previously identified as having a problem. Regulators found annual loyalty penalties of £800 million for mortgage holders, £451 million for broadband customers, and £83 million for mobile customers paying a bundled contract including a handset.

The charity warns consumers are paying a high price for this inaction, in the midst of a cost-of-living crisis:


Loyalty penalty cost per person per year

Action taken since 2018

UK adults paying the loyalty penalty during the cost-of-living crisis



⬤ FCA – no action




⬤ Ofcom – some voluntary commitments from firms

1.5 million



⬤ Ofcom – some voluntary commitments from firms

7 million

If a customer pays the loyalty penalty across all three markets this could cost £1,144 a year, equivalent to more than half of the current energy price cap. The £95 monthly cost of the loyalty penalty is equivalent to 17 days average energy use.

But of those paying the loyalty penalty, 18% said it’s too difficult or time consuming to switch, and a quarter of a million (3%) didn’t even know they could.

‘Mobiles and broadband are a lifeline and so people don’t rock the boat’

Mike Emmett runs training for advisers at Citizens Advice Cardiff & Vale to help people reduce their outgoings as part of a manageable budget.

He said: “Many people see their mobile and broadband as a lifeline. They need them to speak to people and do things like manage their Universal Credit account, and help their kids with their homework.

“But they’re usually reluctant to switch for fear of rocking the boat, particularly because of the prospect of credit checks. We also find people who are digitally excluded or who have mental health problems often prefer to speak to someone about switching, but they can wait for hours on the phone and end up giving up

“It’s so frustrating when we see people who are on the lowest incomes paying the loyalty penalty, as they’re forced to jump through so many hoops to try and sort it.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“The government did the right thing by strengthening its cost-of-living help, but finally fixing the loyalty penalty could put more than twice as much money back in some people’s pockets as the £400 October energy grant.

“As we all pull together to weather the cost-of-living crisis, it’s incredibly frustrating to see there are still firms out there that prefer to help themselves than help the people who’re most in need.

“The time for piecemeal pledges has passed. Regulators must tackle the loyalty penalty across these three markets – no more excuses, no more delays.”

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Winter crisis in summer: Citizens Advice reveals latest insights as cost-of-living pressures pile on


Friday 29 July 2022

  • Dame Clare Moriarty: “The charts are going in the wrong direction”

Citizens Advice has today launched an interactive dashboard which shows the unfolding cost-of-living crisis and its real-time impact on people seeking the charity’s support.

The latest data deep-dive reveals a series of worrying trends, including a summer peak to issues traditionally seen in winter and rocketing demand for crisis support.

Three key findings from Citizens Advice:

1. Crisis support continues to grow at record-breaking levels

By the end of this month Citizens Advice will have supported over 120,000 people with access to food banks and other charitable support, more than numbers seen in 2019 and 2020 combined.

Based on the charity’s projections, by the end of 2022 it is likely to have supported 57% more people than last year with access to crisis support.

2. The number of people unable to top up their prepayment meter is at an all-time high despite the warmer weather

Citizens Advice is supporting more people unable to top up their prepayment meter this June than it did in January. In fact, this issue is at record levels.

Meanwhile energy debts are on the rise. So far this year the charity has helped more than 47,600 people with energy debts. The average person the charity has supported via a debt assessment is more than £650 in arrears to their energy company.

3. Disabled people are among those being hardest hit by the cost-of-living crisis

Demographic insights in Citizens Advice dashboard show that disabled people are among those most likely to be seeking support on cost-of-living issues, including for problems like debt, housing and energy bills.

Nearly 45,000 disabled people have contacted Citizens Advice in June for help with these types of problems – exceeding the number who came for non cost-of-living related advice.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“Our data paints a picture of the stark choices facing families everywhere as the cost-of-living crisis bites.

“Most worrying is that issues we’d typically see in winter – like people unable to top up their prepayment meter – are peaking in the height of summer.

“It’s clear our charts are only going in the wrong direction. The government did the right thing by bringing in support through the benefits system to help people struggling the most. It must now be ready to act again before winter sets in.”

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PIP delays leave disabled people hundreds of millions of pounds out of pocket

Thousands of people could see benefits payments STOPPED if they go abroad – what you need to know

Friday 08 July 2022

Hundreds of thousands of people are having to wait for £300 million of vital support because of delays to PIP applications, according to new analysis from Citizens Advice.

Personal Independence Payment (PIP), which can see people with an illness, disability or mental health condition receive up to £157 a week, is a lifeline for millions of people. But the waiting list for an assessment is now at an eye-watering 327,000 people, with an average waiting time of 5 months. Citizens Advice projects this means £294m of payments that would be awarded are being held up.

Waiting for this payment is having a huge impact on people. Delays in assessment mean that support is held up, forcing people into impossible choices as they try to make ends meet.

1 in 5 people who have needed a food bank referral from Citizens Advice in the last 3 months also have an issue with PIP. Many of those waiting for a decision will also be eligible for the £150 disability benefits cost-of-living support payment but are unlikely to get it before October’s mammoth energy price hike.

There are more people coming to Citizens Advice for help with PIP than with any other issue – 41% more than the next highest issue. Around 150 people are contacting advisors every hour for one-to-one help, and its webpage on “How the DWP makes a decision on PIP claims” had 27,700 page views last month, up 56% year on year.

Citizens Advice is calling on the government to take urgent action to relieve pressure in the system and help get money to people who desperately need it. The charity is calling for an emergency plan from the Secretary of State for Work and Pensions to urgently tackle this backlog, including reducing the number of claimants required to have a medical assessment – the main reason for these delays – and extending the award period so people have to reclaim less often.

Kate’s Story*: “Not having PIP is forcing me to push myself to do things that I know I shouldn’t be doing and it’s seriously affecting my health”

Kate is in her 20s and due to an injury suffers from a stomach prolapse. She can’t work, receives Universal Credit and struggles with day-to-day tasks and needs a lot of support.

She previously received PIP and had to reapply. Overwhelmed, she turned to Citizens Advice for help.

Kate* said:

“Six months on I’ve still not heard anything. I only have £400 of Universal Credit to live off a month and some of that I’m using to pay off rent arrears.

“When I was receiving PIP, I could afford to get a taxi to go and get food shopping. My condition means I can’t really take public transport as I can’t wait around for long periods and I can’t carry much – even walking or sitting down hurts. So now I’m having to force myself to get food if I feel able to do it that day. But then I’m really ill afterwards.

“Sometimes I’m not well enough to go and get food so I just don’t eat. Then I get dizzy and often faint. Not having PIP is forcing me to push myself to do things that I know I shouldn’t be doing and it’s seriously affecting my health.

“I used to have money to pay people to help with doing some jobs around the house or do a few bits to help me – sometimes I’d rely on friends to help me get dressed. I can’t afford a taxi to go out and see my friends so I’m isolated. On top of that the cost of my food and electricity has gone up, my electricity has doubled in price and food is so expensive.

“PIP was a lifeline for me and I just can’t believe 6 months on I’ve not heard anything. I rely on a lot of support and without the money I can’t get that extra help which would make my life easier.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“The government did the right thing by targeting more financial support towards those who need it most. But there are still things they could be doing to get money in the pockets of people who desperately need it in the cost-of-living crisis.

“Getting a grip on the PIP assessment backlog needs to be a priority for the government. Delays in getting money to people who’re entitled to it can wreck lives. With costs rising all the time, people need this regular support now, not a backdated payment months or years in the future.“

Our advice: “If you struggle with things like preparing and cooking food, washing and bathing or communicating with others, it might be worth applying”

Kate Smith, Senior Benefits Expert at Citizens Advice, said:

“PIP can make a huge difference for people who struggle with day to day activities – but the application process can be challenging.

“If you need extra help because of an illness, disability or mental health condition you might be eligible. It’s hard to say if you will qualify for PIP, because it’s assessed on the level of help you individually need rather than being tied to a condition or needing to take a specific medication.

“But if you struggle with things like preparing and cooking food, washing and bathing or communicating with others, it might be worth applying. There is also a mobility component to PIP, so if you have difficulty walking outside you might qualify.

“To apply, you need to contact the Department of Work and Pensions to fill in the initial claim form. It’s best to call them as they can complete it on the phone. You’ll then be sent another, more detailed, form to give details of how your condition affects your day-to-day life, before undertaking a medical assessment.”

You can find out more about Personal Independence Payment, including how to apply and guidance for completing the forms, on the Citizens Advice website.