Three million overpaying on mobile and broadband deals

New research by Citizens Advice has found that millions of loyal mobile and broadband customers are being forced to jump through hoops to avoid being ripped off on their bills – simply because mobile phone and broadband providers aren’t being upfront with better renewal deals.

The research showed that instead of automatically offering existing customers their most competitive price, providers are penalising consumers, with three million people paying over the odds for their contracts.

On average, people who call and negotiate for a discount on their bills can save more than £325 a year combined for mobile and broadband bills. As a result, the charity estimates that collectively, loyal consumers who don’t negotiate are losing out on £28m in savings every month.

Its findings reveal the murky practice of only offering better deals and discounts after customers make persistent efforts.  This includes people being forced to hunt through confusing online options, call up and negotiate or even threaten to switch to a new provider. But almost one in five people (18%) don’t negotiate or switch at all.

With Citizens Advice’s research finding that nearly 16 million UK consumers – almost one in three – negotiated with their provider at the end of their last fixed-term telecom contract, the charity suggests that for many, it can reap big financial rewards.

When fixed-term contracts end, consumers have three options: accept what their current provider offers, negotiate with them for a better deal, or switch to a new provider. While switching can help people save money, it can be time-intensive and involve setting up new equipment.

Most often, people choose to negotiate; however, the charity warns there is a lack of transparency on fair pricing. Citizens Advice found that most people who negotiate on the phone (78%) find at least one of the steps in the renegotiation process difficult. This includes navigating confusing call menus to get through to the right person (43%) and waiting on hold (55%).

Citizens Advice also found that two in three people (66%) who negotiated on the phone experienced at least one negative consequence, such as feeling like they wasted their time (39%) or feeling stressed (37%).

The regulator Ofcom has previously taken steps to address the practice of ramping up prices mid-contract and to make switching easier. But with almost half of telecoms consumers on fixed-term contracts (48%) negotiating at least one telecoms contract – the most common step for those on fixed-term deals – the charity is calling on Ofcom to make telecom pricing fully transparent.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said “For too long, mobile and broadband providers have forced consumers to go through the charade of pretending to leave in order to access hidden renewal deals.

“Millions of people are still paying over the odds for something as essential as mobile and broadband because of this murky practice. Ofcom has taken some welcome steps to strengthen protections for consumers, but this loophole needs to be closed. We want to see Ofcom clamp down on long overdue transparency on pricing – closing the gap between what deals are on the table and what’s kept under the counter.”