“We've found that for far too long broadband customers have been penalised for staying loyal to their providers, so it’s encouraging to see Ofcom secure some action from all six major companies.

“We agree with Ofcom that companies still need to do more. Any one-off commitments must turn into permanent solutions to ensure the loyalty penalty is stamped out.

“The impact of coronavirus means it’s vital regulators do as much as they can to help relieve financial pressure on struggling households. Government must make sure that Ofcom has the powers necessary to implement stronger measures that work alongside these voluntary commitments, such as implementing social tariffs.”

BACKGROUND:

Citizens Advice submitted a super complaint on the loyalty penalty - in the mobile, broadband, home insurance, mortgages and savings markets - to the Competition and Markets Authority  (CMA) in September 2018 calling for it to consider how the problem can be fixed. The CMA’s response to the super complaint, the following December, said it agreed and had found damaging practices by firms which exploit unsuspecting customers. The CMA said it wanted to see urgent action. The CMA provided a further update in July 2020 , where it recognised the impact of coronavirus on regulators timetables but said that consumers should not continually have to be ‘on their guard’ to ensure they are not being ripped off as contracts come up for renewal. 

Research in 2018 by Citizens Advice found that across five essential markets (mobile, broadband, home insurance, mortgages and savings): 

• British consumers lose around £4 billion a year to the loyalty penalty (or £11 million a day).
• Eight in 10 people are paying a significantly higher price, in at least one of the markets, for remaining with their existing supplier.

This is the fourth super complaint Citizens Advice has made since being given the power in 2002. Its super-complaint on payment protection insurance (PPI) in 2005 helped to generate a huge win for consumers, with at least £38 billion returned to customers in refunds and compensation so far.

Notes to editors

1. The loyalty penalty super complaint can be found here. 

2. The CMA’s July 2020 update can be found here . 

3. The loyalty penalty cross-sector report can be found here.

4. The PPI figure is sourced from the FCA. 

5. The availability of face-to-face services will be affected during the outbreak. If people need to speak to someone for advice, they should check our website for the status of their nearest Citizens Advice. 

6. Citizens Advice will continue to offer advice over the telephone on its Adviceline - 03444 111 444 - as well as online chat with advisers.

7. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.

8. Our network of charities offers impartial advice online, over the phone, and in person, for free.

9. We helped 2.8 million people face to face, over the phone, by email and webchat in 2019-20. And we had 34.5 million visits to our website. For full service statistics see our monthly publication Advice trends.

10. You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.

Broadband customers to save millions following Ofcom review