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Analytics
27 November 2024
Author: David Rankin

How Super-Complaints Have Shaped UK Legislation and Regulation

Since their introduction in the UK in 2002, super-complaints have become a powerful tool for consumer protection, bringing to light some of the most widespread consumer harm practices of the past two decades, including mis-sold payment protection insurance (PPI), card payment surcharges and loyalty penalties.

But, despite this, lots of consumers don’t even know that this piece of legislation exists.

So, what exactly is a super-complaint?

As defined by the Enterprise Act 2002, a super-complaint can be submitted by a designated consumer body (like Which? or Citizens Advice) to a regulator if features of a market for goods or services appear to be harming consumer interests.

Although super-complaints are not common, successful complaints result in thorough investigation, often by multiple regulators, and have led to varying levels of industry reform and consumer remedies – be that through enforcement action, litigation, legislation changes or voluntary agreements between regulators and industry players.

Looking at some examples, we can see just how much influence super-complaints have had on the UK’s legal and regulatory environment on behalf of consumers.

Payment Protection Insurance

Most people will have heard of PPI (whether through cold calls, TV adverts or anecdotally) as one of the biggest mis-selling scandals in the UK.

In 2005, Citizens Advice made a super-complaint to the Office of Fair Trading (OFT) arguing that consumers were being sold PPI which only partially covered their liability to default for an excessively high price. They also said PPI was frequently being sold to customers who did not need or want it, citing evidence of high-pressure sales tactics. [1]

Off the back of the complaint, the OFT launched a market study which eventually resulted in their referral of the market to the Competition Commission for further investigation. The Competition Commission went on to ban the sale of single premium PPI at the point of sale of credit, as well as providing a package of other remedies (including requirements for the provision of personal quotes and annual reviews) which came into force on 6th April 2011.[2]

Since the super-complaint, banks, building societies and other credit providers have paid out £36bn in mis-sold PPI claims brought by consumers.[3]

Card Payment Surcharges

In 2011, Which? submitted a super-complaint to the OFT about opaque and excessive surcharges on card payments in the passenger transport sector.

The OFT launched an investigation, resulting in 12 airlines agreeing to stop applying these charges.

The reach of the super-complaint went further though, as the OFT also recommended that the government introduce consistent, economy-wide measures to stop all retailers applying surcharges to debit card payments.

The government went on to introduce legislation banning excessive surcharges on credit and debit card payments across the board, which came into force in April 2013.

Loyalty Penalty

In 2018, Citizens Advice made a super-complaint to the Competition and Markets Authority (CMA) about a so-called “loyalty penalty” being charged to long standing customers in five markets:

  1. Mobile
  2. Broadband
  3. Cash Savings
  4. Home Insurance
  5. Mortgages

The loyalty penalty refers to higher prices being paid by existing customers for a service relative to the price a new customer would be offered for the same service. A lack of transparency around pricing means loyal customers often don’t know that they are getting a bad deal, particularly in the case of vulnerable consumer groups who are less able to shop around.

The outcome of the CMA’s investigation showed firms deploying yearly price rises, high exit fees, complicated cancellation procedures and unfair auto-renewal policies.[4] As a result, the CMA made a series of recommendations to the government, Ofcom and the Financial Conduct Authority (FCA), aiming to improve consumer protections in these markets.

This super-complaint is particularly noteworthy as it has resulted in the filing of opt-out collective proceedings in the Competition Appeal Tribunal (CAT) worth an estimated £3.3 billion. Proposed class representative Justin Gutmann filed the claims in November 2023 against UK mobile network operators Three, O2, Vodafone and EE seeking compensation on behalf of consumers engaged in an estimated 28.2 million contracts.[5]

Super-complaints are designed to identify widespread consumer harm that consumers themselves may not be able to spot due to information asymmetry.

The introduction of the super-complaint mechanism in 2002 and the resulting regulatory investigations highlighted systemic issues in the way that some industries were treating their customers.

These discoveries contributed to the development of the Consumer Rights Act 2015, an act which aimed to consolidate and simplify existing legislation, so that consumers can better understand their rights.

And as we have seen, they lead to direct regulatory change and industry reform to better protect consumers.

 

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We hope you've found this article of interest.

If you'd like to discuss it, or any other matters where we may be able to assist you, please contact David Rankin on david.rankin@puntersouthallgroup.com.

 

[1] Financial services super-complainants confirmed by government - GOV.UK

[2] Payment Protection Insurance Market Investigation Order

[3] PPI: 'It was a jaw-dropping amount' - BBC News

[4] CMA publishes loyalty penalty update - GOV.UK

[5] 1627/7/7/23 Mr Justin Gutmann v Telefonica UK Limited - Summary of Collective Proceedings Claim Form | 19 Jan 2024

 

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