Mobile and broadband companies not being upfront about better renewal deals that could save consumers £325 a year
"Murky practice" of hidden deals causes loyal customers to jump through hoops, says Citizens Advice
Three quarters of people trying to negotiate for a better renewal deal face difficulties in the process, including being left on hold or navigating confusing call menus
Charity calls for pricing transparency to stop customers paying over the odds
Millions of loyal mobile and broadband customers are being forced to jump through hoops to avoid being ripped off on their bills - simply because providers aren’t being upfront with better renewal deals.
New research by Citizens Advice has revealed 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 money off 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 unearth the murky practice of only making better deals and discounts available after persistent efforts from customers. 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.
Forced to jump through hoops
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.”
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Notes to editors:
Citizens Advice’s report ‘The real cost of hidden deals’ can be found on the charity’s website.
All survey figures are drawn from a nationally representative survey of UK adults conducted for Citizens Advice by Opinium Research. The total sample size was 6,000 UK adults. Fieldwork took place between 22nd April and 6th June.
To calculate the number of people in the UK paying the loyalty penalty, we used the ONS mid-2023 population estimates to calculate the number of UK adults. From the survey, we calculated the percentage of respondents who hold fixed-term mobile contracts, and from there the number of UK adults who hold each of those contract types. We excluded those in fixed term bundle contracts that had both mobile and broadband. The survey identified the percentage of people in each contract type who were out of contract and of those the percentage who had seen their bills increase after their fixed-term ended. These people we determined were paying the loyalty penalty. 135 respondents (equates to 1.2 million people) who were out of term on a fixed term contract with mobile (this includes those with mobile bundles that do not include fixed broadband) said their contract costs increased, by an average of £6.16 per month. This equates to £7.5 million per month for mobile contracts. 216 respondents who were out of term on a fixed term contract with broadband (this includes those with broadband bundles that do not include mobile) said that their contract costs increased by an average of £10.51 per month. When extrapolated to the UK population, this equates to £20.6 million per month for broadband contracts. This equates to a loyalty penalty of £28.1 million per month overall for fixed term broadband or mobile contracts. As some people could be paying the loyalty penalty for both mobile and broadband, for the total number of people in the UK paying the loyalty penalty, we took the net percentage of people out of contract and who had seen their bills increase when the fixed term ended for a mobile and/or broadband contract and applied this to the number of people with pay monthly contracts to find that 3 million total people in the UK pay the loyalty penalty.
When calculating ‘loyal consumers who don’t negotiate are losing out on £28m in savings every month’, we based the statistic on consumers who are currently out of term in their fixed term mobile or broadband contracts who said their contract price increased when their contract ended.
To calculate ‘almost one in five people (18%) don’t negotiate or switch at all’, we based the statistic off of those who are currently on a fixed term contract and previously had a fixed term contract, or are currently out of term on their fixed term contract.
For ‘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’, this includes those that are currently out of term on their fixed term contract, and excludes those that are currently on fixed term contracts but were not on a fixed contract before this one.
When calculating that nearly 16 million people in the UK negotiated with their provider at the end of their last mobile or broadband fixed-term contract, we identified the number of adults in the UK using ONS mid-2023 population estimates. The survey asked respondents whether they had negotiated for their current fixed term contract of any type (48%). The base of this question was all those whose previous and current contract was fixed-term and those that were out of term. In a survey of 6000 people 1,725 respondents fit this base and have negotiated, which equates to 15,825,361 UK adults.
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