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Sticking with one mobile provider gets you... Oh. Price rises, big exit fees, and lovely, lovely lock-in

UK competition bods threaten action against 'loyalty penalty'

The UK's Competition and Markets Authority has issued an urgent call for action against mobile providers that rip off loyal customers with high prices even once handsets are paid off.

In an investigation published today, the watchdog said phone pushers aren't playing fair and should release customers from costly contracts once they have have paid off the device.

The probe was prompted by a super-complaint filed by Citizens Advice over the issue of continued customer lock-in in five markets: mobile, broadband, mortgage, insurance and cash savings markets.

It found a range of dodgy practices that exploit customers:

Continual year on year stealth price rises; costly exit fees; time-consuming and difficult processes to cancel contracts or switch to new providers; and requiring customers to auto-renew or not giving sufficient warning their contract will be rolled over.

The report (PDF) made a series of recommendations to the government and regulators to tackle the so-called "loyalty penalty". They included a set of clear principles for businesses to follow, and publishing data on the size of the loyalty penalty for suppliers each year.

For mobile providers, the authority gave its backing to a requirement that customers on bundled handset and airtime contracts be moved to a fairer tariff when their minimum contract period ends.

Ofcom has already taken steps towards addressing this, having recently announced plans to require that comms providers tell customers when their contract is up and alert them to better deals.

The CMA also launched a separate review into the antivirus software market.

This will look at whether automatic renewal is set as the default option, whether the customer is notified – and if so, when – and whether the renewed subscriptions cost the same as the original.

The authority also called for the government to press ahead with its smart data review, which is pushing providers to improve data portability so customers can switch more easily.

The watchdog emphasised that it wanted to see urgent action taken, saying that "if sufficient progress isn't made, it may take further action". ®

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