Telecoms regulator Ofcom has been urged to do more to help broadband and mobile customers who pay a “loyalty penalty” for sticking with their provider.
Some long-time customers pay more than new customers for the same service, and Citizens Advice wants action to be taken.
In 2021, Ofcom estimates the switch could save people £83 a year on mobile bills and £61 on broadband costs.
A Citizens Advice survey of 3,087 Britons suggested up to one in seven may be paying a “fidelity penalty”.
Citizens Advice told BBC News the survey suggested that one in three broadband customers and one in ten mobile customers with bundled plans who pay for their phone and airtime together could be affected.
Stopping the penalty, it is argued, will make a big difference for squeezed households.
Ofcom said the number of unsubscribed broadband customers has fallen by more than a million since it introduced new rules requiring providers to send purchase invitations.
It also said overpayment among mobile customers on bundled contracts had fallen by £100million after operators pledged to lower prices when original contracts end.
The regulator also requires companies to share details of their best-of-the-year offers with customers who stay with them without signing a new contract.
Citizens Advice analyzed 165,000 budgets from people who came to it for debt help.
The results suggest that those with the lowest incomes spend almost twice as much of their income on telecom as those with the highest incomes.
The charity cited the example of Tracey, who is dependent on disability benefits.
According to Citizens Advice, she signed up for a £30-a-month package in 2006, which included television, landline, broadband and international calls.
In January she started going through her bills looking for possible savings and found the costs had risen to £80.
“Everything rises; Gas, electricity, groceries and I have a mortgage to pay. I shop late at night for discounted groceries with yellow stickers, I’ve turned off my gas as I can’t afford to fix the boiler or use the heater, and I go nowhere but to my hospital appointments,” she told Citizens Advice.
“New customers pay £50 less than me for the same deal. I paid almost £3,000 more for being a loyal customer. How on earth can they justify me paying so much more – especially since I was with them for 16 years?”
Mike Emmett, who runs training for advisers at Citizens Advice Cardiff & Vale, said: “A lot of people see their mobile phone and broadband connection as a lifeline. They need them to talk to people and do things like manage their universal credit account and help kids with their homework.”
He said many were reluctant to switch for fear of “rocking the boat, especially with the prospect of credit checks.”
“It’s so frustrating when we see people on the lowest incomes paying the loyalty penalty as they’re forced to jump through so many hoops to try and sort them out.”
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In January, the Financial Conduct Authority (FCA) ended incremental annual increases, known as “price walking,” for car and home insurance by requiring companies to automatically switch their customers to better deals.
Citizens Advice is looking for similar action from other regulators.
Ofcom said its focus is on making sure customers get the best deal.
Switching to a new contract when an existing one expires can result in significant savings and it has taken steps to make the process easier and faster – a “One Touch Switch” system is also due to be rolled out in April 2023.
Ofcom added: “There is also a moral imperative for providers to support out-of-contract customers who are experiencing financial difficulties and it is important that they do whatever they can to help them secure a more affordable deal.”
In February Ofcom found that 4.2 million households could halve their broadband bills by taking advantage of social tariffs, cheap offers from broadband companies for low-income people, but only 55,000 households have actually done so.
Ofcom wants companies to promote these deals more widely.
The Internet Service Providers Association – a UK trade association representing many broadband companies – said the industry’s efforts have resulted in “more customers than ever” switching.
It said its members are determined to help customers through the cost of living crisis and urged those struggling with bills to contact their provider.
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