Citizens Advice has called on telecoms regulator Ofcom to take stronger action against the 'loyalty penalty' that sees long-standing broadband and mobile customers paying more than new customers for the same service. A survey of 3,087 UK adults suggested up to one in seven may be affected, with one in three broadband customers and one in ten mobile customers on bundled contracts paying over the odds.
Ofcom estimated in 2021 that switching providers could save customers £83 a year on mobile bills and £61 on broadband. While the regulator has introduced rules requiring providers to send prompts to shop around, Citizens Advice argues more needs to be done to protect hard-pressed households.
The charity analysed 165,000 budgets of people seeking debt help and found that those on the lowest incomes spend nearly double the proportion of their income on telecoms compared to the highest earners. It highlighted the case of Tracey, a disability benefits recipient who saw her £30-a-month package from 2006 rise to £80, while new customers pay £50 less for the same deal.
Mike Emmett of Citizens Advice Cardiff & Vale said many people see mobile and broadband as a lifeline for managing benefits and helping children with homework, but are reluctant to switch due to fear of credit checks. Ofcom noted that out-of-contract broadband customers have fallen by over one million since its prompts were introduced, and overpayment among mobile bundled customers dropped by £100m after operators committed to cutting prices when contracts end.
Ofcom said its focus is on ensuring customers get the best deal, with a 'One Touch Switch' system due in April 2023 to simplify switching. It also emphasised a moral imperative on providers to support customers in financial hardship. The Internet Service Providers Association said industry efforts have led to more customers switching than ever.
