BT customers are paying £236 a year more than they should for their broadband
Broadband providers are still charging broadband customers £9 million more a day than they should, one year after Citizens Advice launched a super complaint on the loyalty penalty.
On average eight out of 10 broadband customers are overpaying by £179 a year, research from price check website Is My Bill Fair has found.
Is My Bill Fair compared data from over 100,000 customers over the last six months to find out which broadband customers have been hit hardest for their loyalty by comparing the prices available for new customers.
It found that BT customers were worst off, with 86% paying £236 a year more than they should for the service they receive.
It was followed by Sky, which overcharges customers £213.60 a year, Virgin Media (£182), TalkTalk (£128) and Plusnet (£121).
EE customers have the lowest loyalty penalty across the industry at £97 per year impacting 66% of customers – the lowest in the study.
As customers typically stay with their broadband provider for seven years, they could be stung with an over payment of £1,253 during this period.
A BT spokesperson comments: “At BT we believe that all customers should get the right products and services for them for a fair price. Our more than one million BT Plus customers pay the same price whether they're in or out of contract.
"We froze prices for broadband, landline and mobile customers for 2019 and we were the first provider to link future price changes to CPI to be clearer and more predictable.
“We're doing more than ever to make sure that BT customers who may be vulnerable are getting the service that's right for them. We're continuing to work closely with Ofcom to help maintain a dynamic market where customers get great value and choice, and we'll be announcing more for our customers in the coming months.”
Loyalty penalty
The so-called loyalty penalty occurs when customers of a business pay higher costs for staying with the same product, while new customers pay significantly less.
Last year, the Citizens Advice submitted a super complaint to the Competition and Markets Authority on consumers being ripped off with a loyalty penalty for broadband, home insurance, mortgages, mobile phone contracts and savings.
Alex Perrin, chief executive of Is My Bill Fair, says: “We can't deny the fact that regulatory bodies are attempting to help customers lower their bills by kicking off the super complaint last year. But trying to make providers do the right thing is a very long and slow process. In fact, 12 months on and nothing has changed.
“While this rumbles on, consumers are still being hit in the pocket and paying £3 billion more than they should for their broadband services. Just to add further insult to injury, providers continue to put prices up for existing loyal customers with Virgin Media implementing hikes of almost 5% this month.”
Fairer prices
Some of Britain’s biggest broadband providers have committed to offering fairer prices to broadband customers when their contract comes up for renewal following a review by Ofcom.
Research by the regulator has found that 40% of broadband customers - 8.8 million people - are out of contract.
BT, Sky and TalkTalk will allow their out-of-contract customers to get the same deals as new customers when they take out a new contract.
BT and Sky will also cap prices rises for customers when their contracts end.
TalkTalk and Virgin Media will carry out annual price reviews with their vulnerable customers to ensure they are on the best deal for their needs.
BT, EE, Plusnet and TalkTalk will protect out-of-contract customers from above-inflation price rises.
Most of these measures will come into effect by March 2020.
Under new Ofcom rules set to be introduced February, broadband, home phone and pay-TV customers will have to be notified when their contract is coming to an end and told about the best deals available.
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