The UK's Competition and Markets Authority has said it will seek new powers to fight the so-called loyalty penalty faced by consumers across multiple industries, including insurance, mobile phones, broadband, savings accounts and mortgages.
The challenge comes off the back of a super-complaint made by consumer body Citizens Advice in September, a practice designed to end market abuses.
The loyalty penalty, which is the difference between what existing and new customers pay for the same service, is estimated to cost consumers around £4bn a year. Elderly and low-income consumers are seen as the most vulnerable.
The CMA has proposed a package of reforms to tackle the penalties, including possible legislation to allow it to impose large fines and targeted price-caps on irresponsible businesses. In particular, recommendations have been made to stop mobile phone providers from charging pay-monthly customers the same amount once they've paid off their handsets, and insurance firms from hiking prices.
Firms should also be held publicly accountable for over-charging customers, with regulators asked to publish the size of the loyalty penalty in key markets and for each supplier on a yearly basis. A six-month deadline has been set for progress by businesses.
The watchdog has also today launched an investigation against the anti-virus software sector, taking a tough first stance as part of the process.
"Our work has uncovered a range of problems which leave people feeling ripped off, let down and frustrated," said CMA chief Andrea Coscelli. "They shouldn't have to be constantly 'on guard', spending hours searching for or negotiating a good deal, to avoid being trapped into bad value contracts or falling victim to stealth price rises."
"Millions of loyal or vulnerable customers are being taken advantage of each year by firms - and end up paying much more than they should do. This must come to an end."
Business secretary Greg Clark backed the CMA's decision, adding the government's consumer white paper due for publication in the first half of 2019 will "ensure markets provide consumers with competitive prices and quality products and services".
Citizens Advice said it was satisfied with the watchdog's "strong response" to its super-complaint, however "the onus is now on Ofcom and the Financial Conduct Authority to act".