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Loyal broadband customers are paying a swingeing premium for sticking with their provider after introductory rates end, Citizens Advice has warned.

According to the charity, the prices of the cheapest broadband deals go up by £113 a year — or 43 per cent — on average after their initial low-cost teaser rate comes to an end.

Citizens Advice believes this means people who stay with the same provider are being hit with a "loyalty penalty".

Furthermore, it pointed out that more than one in three customers do not know about these price increases.

Broadband providers have therefore been urged to help customers avoid significant price hikes by being clearer about what they will charge after the introductory deal ends.

This, it said, means they should include up-front information in marketing material and when people sign up for a contract, as well as alert people when the fixed price comes to an end.

Gillian Guy, Chief Executive of Citizens Advice, commented: "Loyal broadband customers are being stung by big price rises once their fixed deal ends.

"People often choose their broadband deals based on the price that works for them, but our evidence shows that many do not realise the price will rise after the end of the fixed deal. 

"With people staying with their supplier for an average of four years, these extra costs can run into hundreds of pounds."

According to a recent press release by uSwitch, this amounts to around £1.5 billion a year.

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Interestingly, Virgin Media was found to be the only one of the five biggest broadband providers that did not impose a so-called loyalty penalty when the initial term of a contract expired.

By contrast, figures showed that a 12-month contract with BT could go up in price by 67 per cent, with a penalty of £198.

Similarly, a 12-month contract with Sky will become £120 (or 53 per cent) more expensive, while an 18-month deal with EE goes up by £90 (36 per cent).

TalkTalk, meanwhile, was found to impose loyalty penalties of £66 (or 28 per cent) on a 24-month contract.

Citizens Advice is particularly concerned that the issue is most likely to affect the most vulnerable people in the UK.

Indeed, figures from the body showed that people aged 65 or above are more than twice as likely as their younger counterparts to have stayed in the same broadband contract for more than a decade.

Research also indicated that people on low incomes are nearly three times as likely as those on higher salaries to have stuck with the same deal for at least ten years.

Citizens Advice has therefore called on Ofcom to look at ways of minimising the impact of broadband contract price rises on vulnerable consumers.

A price cap was suggested as one option, as this could function similarly to the pre-payment meter cap in the energy sector.

"Older customers and those who have less money are more likely to stay with their supplier for longer, meaning their loyalty penalty could reach over a thousand pounds," Ms Guy commented.

"The government has rightly put energy firms on warning for how they treat loyal customers - the actions of broadband firms warrant similar scrutiny. Extra protections for vulnerable consumers are also a must."

This comes after a survey by ISPreview.co.uk found that more than four in ten consumers have not switched their broadband provider at all in the last five years, despite many being dissatisfied with the speeds they were getting.

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