This follows the government announcing that it will legislate to give regulators new powers to stop loyal customers being taken advantage of if their existing powers are insufficient.
Online mortgage broker Trussle has arguedthatthe government should give the Competition and Markets Authority (CMA) powers to intervene to prevent more homeowners from becoming mortgage prisoners.
This follows the government announcing that it will legislate to give regulators, such as Ofcom and the Financial Conduct Authority, new powers to stop loyal customers being taken advantage of if their existing powers are insufficient.
Ishaan Malhi (pictured) chief executive and founder of online mortgage broker, Trussle, said: "While the government consultation is a positive step in the right direction, it’s long overdue.
“This work must extend to the mortgage market, where over two million people are trapped in expensive mortgages and losing £25m across the UK every day.
“The loyalty penalty is something we’ve seen a lot of in recent years. Yet the lack of action from the industry and the regulator is disappointing.
“All too often, homeowners are unaware that they’ve slipped onto their lender’s Standard Variable Rate, meaning they’re subject to high interest rates.
“Enough is enough. The CMA should be granted intervening rights sooner rather than later, to prevent homeowners from being trapped in the same costly situation.
“We’re campaigning for a Mortgage Switch Guarantee, to make mortgage switching easier for borrowers and ensure that lenders commit to greater transparency and eliminate the mortgage loyalty penalty once and for all.”
The government said it will consult on giving the CMA new powers to decide itself whether consumer law has been broken, without having to go through the courts.as is currently the case.
New powers would enable theCMAto intervene earlier and more quickly to tackle these failings and would include being able to directly impose fines on firms for poor business behaviour.
Prime Minister Theresa May added: “For far too long, many big companies have been getting away with harmful trading practices which lead to poor services and confusion among customers who have parted with their hard-earned cash.
“The system as it stands not only lets consumers down but it also lets down the vast majority of businesses who play by the rules.
“It is high time this came to an end and today we are confirming our intention to give much stronger powers to theCMA, to strengthen the sanctions available and to give customers the protection they deserve against firms who want to rip them off.”
Business secretary Greg Clark said: “The key to successful markets and businesses is ensuring that they work for the benefit of consumers and that unfair practices are tackled effectively, as the majority do.
“I strongly believe that consumer loyalty should not be exploited and nor should consumers have to work so hard to get a fair deal. We have already shown our willingness to take action through our energy price cap, which means every household is protected from unjustified price rises.
“We are committed to ensuring consumers are not unfairly targeted and penalised for their loyalty and that they can access quality products and services for a price that is competitive and fair.”
The proposed measures come as the government publishes a clear and directresponse to the recommendations by theCMAon the Super Complaint on consumer loyalty brought forward by Citizens Advice.
The new powers will be consulted on in the government’s upcoming Consumer White Paper.
