Citizen’s Advice (CA) has today lodged a super-complaint with the Competition and Markets Authority (CMA), asking the regulator to outline how the problem can be fixed.

The national charity researched the mobile, broadband, home insurance, mortgages and savings markets, and concluded that eight out of 10 people end up paying more than they need for products by remaining loyal to their existing provider – or receiving less interest in the case of savings.

CA calculates that the average cost to the UK consumer is £877 a year, or more than £4bn overall. It also found that older people and those with mental health problems are less likely to switch provider, hence more likely to be materially disadvantaged.

Citizen’s Advice chief executive Gillian Guy said:

“It beggars belief that companies in regulated markets can get away with routinely punishing their customers simply for being loyal. As a result of this super-complaint, the CMA should come up with concrete measures to end this systematic scam.”

Georgie Frost, consumer advocate at Gocompare added: “It’s completely unjustified that customers are still being punished for their loyalty, and this super-complaint from Citizens Advice shows the exact scale of the problem, as it isn’t just restricted to a small number of products and services.

“The so called ‘tease and squeeze’ approach to pricing is the go-to tactic in many industries, including car insurance and energy.  New customers are attracted with a cheaper price and then subject to increasing rates if they remain loyal.

“It’s imperative that people keep shopping around and switching to avoid getting ripped off, but more also needs to be done to make it clearer how customers can switch to avoid being overcharged, and there should be protection for vulnerable groups who are most likely to fall victim to the current process.

“People mustn’t sit back and wait for change to come, and we would encourage them to continue to shop around for the best value products and dump the providers who are giving them a poor deal.”