Weston’s MP, John Penrose, has written to Lord Tyrie about the super-complaint lodged with the Competition and Markets Authority. John has asked for him to consider not only the sneaky price-rises, but also the sneaky data-collection that is making it easier for unscrupulous organisations to spot who is most exploitable:
Dear Lord Tyrie,
I’m writing about the super-complaint lodged with the Competition and Markets Authority (CMA) by Citizens Advice in September. I plan to send you a more detailed submission in due course but, in the meantime. I wanted to make two higher-level points.
Firstly, Citizens Advice are absolutely right to use their super-complaint powers in this case. The figures are sobering, with up to eight in ten people potentially paying more for being loyal customers in at least one of five essential markets, costing £4.1 billion overall each year. These are even bigger values, affecting a larger slice of British households, than the energy price rip-off which sparked my successful cross-party campaign for an energy price cap last year. That campaign only became necessary because the regulator Ofgem refused to use legal powers which Parliament had already granted to them, unless Parliament passed another law requiring them to use the powers they already had. Their central mission is to prevent consumer rip-offs but they failed to act when the chips were down; their credibility and reputation as an independent regulator has been profoundly damaged as a result. I am sure you will not allow the same criticisms to be levelled at CMA as this – even bigger – case moves forward.
Secondly, while the problem of sneaky price-rises for customers who are too busy, too vulnerable or too demoralised to switch when their contracts come up for renewal isn’t new, this case could potentially set an important precedent for the newly-digitising economy. The digital footprint which each of us creates whenever we go online – whether we want to or not – means that companies know far more about their customers than ever before. Often that’s good, because they can tailor their products and services more precisely to what you or I want. But the information can also be misused, in this case to understand which customers are less likely to switch to a rival firm, and to exploit their loyalty by charging higher prices than their less-loyal neighbours for the same things. So the potential for penalising loyal customers is much higher in the new digital economy than it was in the old, analogue world, because unscrupulous organisations find it much easier to spot loyal customers, and offer them different prices, than it was in the past.
This point doesn’t just apply to loyalty penalties, of course. There are many other types of rip-off which could be given fresh legs by this new flood of customer data as well. The lessons which are learned from investigating this super-complaint could apply much more widely as a result. You may, therefore, have an opportunity to strike an important blow in favour of making markets work for the many, not just the few. If so, I’m sure you will take it, and you will have widespread – and, I hope, cross-party – political support if you do.
I look forward to reading the CMA’s initial assessment of the loyalty penalty in the coming months, and hope it will subsequently undertake a wide-ranging and in-depth investigation into this problem.