Millions of vulnerable Sky, Plusnet and EE customers are to be switched onto cheaper broadband deals to ensure they’re not being exploited by the so-called ‘loyalty penalty’.
The three telecoms providers said customers will automatically be shifted over to cheaper deals when their contracts end to help ensure they’re paying a fair price.
The promise will apply to anyone classed as ‘vulnerable’ – which can range from someone with a disability to a person being out of employment or elderly.
Telecoms regulator Ofcom said the move will benefit around 1million vulnerable out-of-contract customers and save them an average of around £70 a year.
It said too many people are being shunted onto expensive deals after their initial discounts come to an end. Many of these customers are also prevented from moving onto cheaper deals because the best prices are reserved for ‘new customers only’.
This is known as the “loyalty penalty”.
Ofcom estimates that 8.7million people are out of contract. On average, these customers pay around £4.70 a month more than their provider’s average price for their service.
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As a result, EE has now pledged to give customers a one-off price reduction that will match the price of its best deal, including those available to new users.
Plusnet said customers will automatically be moved to the best deal after their discount period, including those available to new users.
Sky said customers will get an annual price review, which will see them moved to the cheapest out of contract deal.
It follows a similar move by BT, TalkTalk, and Virgin Media, which all agreed to do the same last year.
Virgin Media also said it has extended its definition of vulnerable to automatically include those who are aged 65-plus and who haven’t switched or changed their package for at least three years.
In addition to the new measures, telecoms and pay TV companies must now write to their customers 10 to 40 days before their contract ends to warn them about any upcoming price rises.
These alerts can be sent by text, email or letter and must include:
Lindsey Fussell, at Ofcom, said: “We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it.
“This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.”