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Are you being stung by the loyalty penalty? TV and broadband customers could be overpaying £690 a year - just by sticking with the same provider

Daily Mail logo Daily Mail 11/01/2019 Grace Gausden For This Is Money

© Alexander Spatari Customers who sign up to combined broadband and television packages are being landed with loyalty penalties of up to £690 a year, new research claims.

Loyal Sky customers could lose the most amount of money, as they have the potential to be paying £690 more than new customers who take advantage of cheaper deals, according to consumer watchdog, Which?.

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Its figures come in the wake of This is Money revealing the extent of the loyalty penalty last month, with figures supplied to us highlighting the worst offenders among broadband, mobile, and breakdown cover providers.

Our Check Your Bills campaign urged people to fight back by comparing what new customers get along with rival firms' prices and demand a better deal - or switch.

a person lying on a bed: Loyal customers could be losing out on hundreds of pounds by staying with the same provider © Provided by Associated Newspapers Limited Loyal customers could be losing out on hundreds of pounds by staying with the same provider

Which? said that 40 per cent of customers who subscribe to so-called dual or triple play (if a phone line is included) bundles have been with the same provider for more than a decade – potentially overpaying by hundreds of pounds as a result.

The consumer group surveyed more than 3,000 members about their standalone broadband, combined broadband & TV or mobile phone contracts in October 2018, to see which companies were charging their customers the most. 

It revealed that Sky customers who had not attempted to haggle with the company on price are paying, on average, £1,050 a year.

However, the cheapest deal currently on the market, was found to be the Sky 'Broadband + Entertainment' bundle, which is available from £30 a month, equivalent to £360 a year – a staggering difference of £690 a year.

Enjoying coffee break Enjoying coffee break

It is worth noting, however, that these prices may not be directly comparable, as many of those paying the higher price could be on a more comprehensive package, with more TV channels and better broadband speed. 

Nonetheless, the Which? study echoes This is Money's research, carried out by check and challenge site Ismybillfair.com, which used customer data supplied to it by more than 100,000 people.

It directly compared people on the same packages and said that the loyalty penalty for broadband-only customers was up to £273, with BT the worst offender.

One place where people may not realise they are being stung is breakdown cover. Our research showed AA customers paid a breakdown cover loyalty penalty of £133, while RAC customers paid £110 more on average than the best price for new joiners. 

a screenshot of a cell phone: Graph highlighting the different amounts that customers pay for their TV & broadband bundles © Provided by Associated Newspapers Limited Graph highlighting the different amounts that customers pay for their TV & broadband bundles

In an attempt to more directly compare packages, Which? also looked at what new customers opting for the high specification TV and broadband would pay.

Even customers who opted for a premium package, that includes faster broadband and extra channels such as Sky Sports, would be paying £780 per year – £270 less than what the average Sky customers told Which? they were paying.

Virgin Media customers, who hadn't haggled on price, were also paying well over the odds for their service, telling Which? that they pay £960 on average annually for their TV and broadband bundle.

This is £576 more per year than if they opted for the provider's basic Player bundle, which is available for £32 a month - £384 a year.

BT customers also told Which? that they were paying more than necessary, with the average customer paying on average £720 a year for their broadband and TV bundle.

A Classic bundle introductory offer with the company, however, would cost a new customer just under £480 a year – £240 a year cheaper.

Even customers who are looking for a more premium package could save money with the Max HD BT package that includes add-ons such as sports and extra channels and costs just under £600 – still £120 less than what the average BT customer said they were paying.

A spokesperson for BT said:  'The majority of customers want and take plans that provide faster broadband speeds than the classic bundle. 

'We fully agree that customers should get great value and a service that suits them. 

'We are working to provide even clearer information to our customers about the options available to them throughout the life of their contract.'

Attractive young woman in casual wear working on laptop and smiling while sitting barefoot and against grey background © g-stockstudio Attractive young woman in casual wear working on laptop and smiling while sitting barefoot and against grey background

Check Your Bill campaign: What you can do 

The fact that loyal customers are charged more will not be a surprise to many people, however, we still let companies get away with it.

At the root of this lies people not realising how much they are being overcharged and inertia, as many cannot be bothered to check their bills, challenge providers and switch if need be.

The CMA could decide to do something about this, but any action is likely to take a long time to kick in.

Watch: Thousands scramble to be Japan's 'luckiest man' [Reuters]

UP NEXT
UP NEXT

This is Money has launched a new campaign to urge our readers to stop companies profiteering on their loyalty. 

We want our readers to take action and Check Your Bill. All it takes are three simple steps: 

Young man sitting in office and working on desktop pc. Businessman looking at computer monitor while working in office. Young man sitting in office and working on desktop pc. Businessman looking at computer monitor while working in office. We also want out readers to help out their friends and relatives who are unlikely to do this themselves, perhaps because they are elderly or not internet-savvy.

To do this get your latest bills together and see how much you are paying, then check the prices offered to new customers.

Contact your provider and tell them you want a better deal or you will leave – if they won't give it to you switch.

You can do this yourself and use the links below to compare rivals' prices, or you could use the ismybillfair.com check and challenge service.  

Back view of female friends watching TV on sofa at home. Back view of female friends watching TV on sofa at home.

A Sky spokesperson said: 'Just like Which? Magazine, we have a range of offers for both new and existing customers.'

This is Money contacted Virgin Media who refused to comment.  

The loyalty penalty affects a large number of households across Britain as 59 per cent of Virgin Media customers said they had been with the provider for at least 10 years, as well as 30 per cent of Sky customers and 25 per cent of BT customers.

a drawing of a face: Sky is one of the companies that has been found to charge loyal customers more © Provided by Associated Newspapers Limited Sky is one of the companies that has been found to charge loyal customers more

Overall, 77 per cent of customers admitted to staying with their provider for at least three years.

Alex Neill, Which? managing director of home products and services, said: 'Yet again we've found that loyalty doesn't pay when it comes to your broadband and TV service. 

'People will choose their provider often because of a cheap introductory deal and then stay for the content offering.

'However, you shouldn't accept getting a bad deal, there are potential savings to be made for those who take the time to haggle and even bigger savings for those who switch.'

Customers are often enticed by introductory deals advertised by providers but then end up staying put after the initial contract comes to an end and the significant price jump kicks in.

a close up of a plate: Which? found that existing BT customers were paying on average much more than new ones © Provided by Associated Newspapers Limited Which? found that existing BT customers were paying on average much more than new ones

Prices can then tend to creep up each year thereafter, meaning that customers are increasingly likely to overpay by a large amount if they stick with the same provider for a long time.

However, 90 per cent of those who haggled managed to receive a fixed discount and now pay 22 per cent less on average for their bundle as compared to if they had not asked for a better deal.

Through haggling, BT customers saved on average £210 a year, Sky customers saved £120 and Virgin Media customers saved £180, according to the Which? survey.

a drawing of a face: Deal: Virgin Media customers managed to get their bundle prices down after haggling the cost © Provided by Associated Newspapers Limited Deal: Virgin Media customers managed to get their bundle prices down after haggling the cost

The Competition and Markets Authority made a series of recommendations in December of last year to address these substantial loyalty penalties after discovering that consumers are being overcharged by around £4billion annually, with those who are less well-off and the elderly, most likely to be overpaying.

These included cracking down on harmful business practices using enforcement and clamping down on harmful practices that stop people getting better deals, as well as publicly holding firms to account for charging existing customers much more.

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