Millions of broadband customers across the UK are being hit with a severe 'loyalty penalty', paying significantly more than new customers for the exact same services. According to a damning new report from the regulator Ofcom, this practice has cost consumers a staggering £1.6 billion.
The Shocking Scale of the Overpayment
Ofcom's research highlights a stark divide between what new and existing customers pay. Those who remain with their provider after their initial minimum contract term ends are often automatically rolled onto more expensive, out-of-contract deals.
The data reveals that a shocking 43% of broadband customers—amounting to 8.8 million households—are currently out of contract. These customers are vulnerable to above-inflation price hikes and are missing out on the competitive deals offered to new subscribers.
How Much More Are You Really Paying?
The financial impact is severe and immediate. On average, out-of-contract customers pay around 25% more than those within their initial agreement. For someone on a standard fibre package, this could mean an unnecessary extra cost of over £100 per year.
This penalty is a direct result of providers incentivising new customer acquisition with deep discounts and offers, while often neglecting to proactively offer the same deals to their loyal, long-standing user base.
Your Action Plan to Slash Your Bill
Fortunately, you are not powerless against this practice. Taking a few simple steps can lead to immediate savings.
- Check Your Contract Status: The first step is to find out when your minimum term ended. You can usually find this information on your bill or online account.
- Haggle with Your Current Provider: Contact your provider and tell them you are thinking of leaving. Use comparison sites to arm yourself with the best available deals from their rivals. Providers often have retention teams with the power to offer you a much better price.
- Switch and Save: If your provider refuses to match a competitor's offer, be prepared to switch. Ofcom's rules have made the process smoother than ever, with your new provider handling most of the switch.
Ofcom's Stance and Future Protections
The regulator has condemned this two-tier pricing system, emphasising that loyal customers should not be penalised. While new rules are being considered to protect vulnerable groups, Ofcom continues to urge consumers to take action themselves by reviewing their contracts and engaging with their providers.
Don't reward your provider's loyalty with a higher bill. A simple phone call or online search could put hundreds of pounds back in your pocket this year.
