A sixth (15%) of mobile customers and one in three (32%) broadband users have fallen out of contract – overpaying by a combined £41 per second or £108 million a month
Ofcom rules means providers don’t have to tell their customers when deals come to an end – unlike energy and insurance
Almost nine in ten (89%) consumers say being informed their contract was ending would result in them seeking a better suited or better value service
Eight in ten (79%) consumers aren’t aware that providers are not required to tell them when contracts are due to end – more than half (54%) say this is annoying
If end of contract notifications were introduced, it would put more control in consumers’ hands and help reduce the £108 million a month overpaid through expired contracts
Uswitch.com calls on the telecoms industry to catch up with other sectors like insurance and energy – and provide out of contract notifications as standard.
London, Wednesday 31 January 2018 – Consumers across the UK are sitting on expired mobile and broadband contracts, potentially overpaying by a combined total of £108 million a month or £41 a second, according to research by Uswitch.com, the price comparison and switching service. Ofcom rules means providers don’t have to tell their customers when deals come to an end – unlike energy and insurance.
More than eight million broadband customers and three million mobile customers who have a handset included with their contract, could currently be ‘out of contract’. This means customers are potentially missing out on a better suited deal and if they wanted to stick to a similar service, they are also potentially paying more than they need to, shelling out a collective £108 million extra a month on contracts that have expired.
Nearly half (45%) of broadband customers, who don’t believe their contract has ended, are in the dark about when their contract is due to finish. This may go some way to explain why a quarter (25%) of broadband customers have been on the same contract for more than three years. To add to the confusion, one in 10 (8%) broadband customers think they are signed up to contracts of three years or more, which is longer than the legal maximum contract length of 24 months.
Once the initial term of the broadband contract is over, if they don’t change to a new deal, customers will most likely be charged ‘out of contract’ prices, meaning bills will increase – for the same service – without the customer even being notified.
When a mobile contract that comes with a handset expires, the customer has, in effect, paid off the cost of the phone and legally owns it outright. If they don’t move to a new deal and instead just continue to pay the same monthly fee, they could essentially ‘double pay’ for the handset or – even if the tariff is automatically adjusted – they could end up paying over the odds for data compared to a similar Sim-only deal. Yet shockingly, around a sixth (15%) of mobile phone customers who could still be in contract don’t know when it is due to expire . This puts yet more people at risk of falling out of contract, potentially overpaying or missing out on a better suited service.
Almost eight in ten (79%) consumers aren’t aware that broadband and mobile phone providers have no obligation to alert their customers when their contracts have ended with over half (54%) of consumers feeling ‘annoyed’ or ‘very annoyed’ by this.
Four in ten (40%) broadband customers say that knowing when their contract was coming to an end would prompt them to search out a cheaper or better bundle, while 47% would contact their provider to negotiate a better deal. One in five (18%) would switch provider altogether to get a better deal.
Amongst mobile users, four in ten (41%) would contact their provider to get a better deal if they were told their contract was coming to an end – while over a third (35%) would research to see if a cheaper service was available.
Richard Neudegg, Head of Regulation at Uswitch.comsays: “It is simply not right or fair that consumers lose out on savings or the opportunity to upgrade to a better service because the telecoms rules haven’t kept pace with other sectors.
“Getting an end of contract notification is standard practice in so many other industries as a very basic measure to help keep consumers in control. The research suggests many users may simply assume it’s the same with telecoms.
“There shouldn’t be a debate about whether consumers should be given the information to help avoid overpaying. Many simply won’t consider their options if they’re not aware they’re about to fall out of contract, especially when they are awaiting an expected notification that never comes. An alert advising the contract is due to expire is the right time to allow customers to take stock and consider if they’ve still got the right service for their needs, at the right price.
“If Ofcom were to introduce end of contract notifications – something they have the power to do – our research shows 89% of customers receiving them would be prompted to consider the quality and value of their service.
“We believe it is time providers do the right thing by their customers and start sending end of contract notifications as standard.”
Find out how you could save over £1,000 a year with Uswitchhere.
Uswitch.com surveyed a sample of 2,002 UK adults (aged 18+) from the 21st to the 27th of December. Results have been weighted to nationally representative criteria. 1462 identified themselves as a mobile user (Pay monthly contract with a handset or SIMO, excluding PAYG). 934 identified themselves as mobile phone users with a pay monthly contract with handset. 1929 identified as having home broadband.
Respondents with a contract that includes a mobile phone were asked ‘When did you sign up to your current mobile contract’ 15% were identified as being out of contract because when cross referenced with the length of contract they signed up to, they had been ‘in contract’ for longer than that term.
Respondents were asked ‘When did you sign up to your current broadband contract?’ 32% answered more than 24 months ago.
Calculation: There are 51,767,000 adults in the UK.
94% have mobile phones = 48,660,980 (https://www.ofcom.org.uk/about-ofcom/latest/media/facts)).
47% of those are on pay monthly contracts with a handset included = 22,701,967.
15% are out of contract = 3,354,253.
3,354,253 people x £8.17 monthly saving (Source Uswitch.com September 2017) = £27, 404, 250
25.3 million fixed BB connections in the UK ( https://www.ofcom.org.uk/about-ofcom/latest/media/facts)
32.2% out of contract = 8,144,790.
8,144,790 x £9.96 monthly saving (Source: https://www.uswitch.com/media-centre/2017/11/broadband-customers-urged-to-use-black-friday-to-avoid-sleepwalking-into-180-bill-increase/ ) = £81,122,109
£27,404,250 + £81,122,109 = £108, 526, 359 per month.
£108, 526,359 / 30.42 (average days in a month) = £3,567,599
£3,567,599 / 24 hours = £148,649
£148,649 / 60 minutes = £2478
£2478 / 60 seconds = £41.29
Both mobile and broadband respondents were asked ‘If your provider notified you that your contract was coming to an end, what would you do? 11% answered ‘nothing’.
Respondents were asked two questions: To your knowledge are mobile phone providers required to inform customers when their contracts are coming to an end? And ‘To your knowledge are broadband providers required to inform customers when their contracts are coming to an end’ - 79% responded either ‘yes’ or ‘don’t know’ to one or other question.
Respondents were told ‘Unlike with household services such as energy contracts, mobile networks and broadband providers are not required to inform customers when their contracts are coming to an end, potentially stopping them from saving money’ And were asked ‘On a scale of 1 to 5, in which 1 is not at all bothered and 5 is very annoyed, does this make you feel?’ - 54% answered 4 or 5, ‘Annoyed’ or ‘Very annoyed’.
Respondents, whose broadband contract has not ended, were asked ‘Do you know when this contract is up for renewal? 45% answered ‘I don’t know when my contract is up for renewal’
Respondents were asked ‘When did you sign up to your current broadband contract’- 25% answered ‘Yes’ to ‘35-36 (3 years) months ago’, ‘3-4 years ago’, ‘4-5 years ago’, ‘5-6 years ago’, ‘6-7 years ago’, ‘7-8 years ago’, ‘8-9 years ago’, ‘9-10 years ago’ and ‘Over 10 years ago’.
Respondents with a broadband contract were asked, ‘what length of broadband contract did you sign up to?’ 8% answered three years or more. (2% ‘36 months’, 1% ‘48 months’, 5% ‘more than five years’)
Respondents, whose pay monthly phone contract (with a handset) has not ended, were asked ‘Do you know when this contract is up for renewal’ - 15% answered ‘I don’t know when my contract is up for renewal’.
Respondents with a broadband contract were asked, ‘If your provider notified you that your contract was coming to an end, what would you do?’ 40% said they would try and find a ‘better bundle, 47% said they would contact their provider to get a ‘better deal’ and 18% said they would ‘switch provider to get a better deal.’
Respondents with a mobile contract were asked, ‘If you provider notified you that your contract was coming to an end, what would you do? 41% said they would contact their provider to get a ‘better deal’ and 35% said they would ‘research to see if there was a cheaper service’
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