Broadband providers make it too tough to switch
Nearly half of consumers are put off switching broadband providers because they deem the process too difficult, according to regulator Ofcom.
Despite knowing they could get a better deal and potentially better service elsewhere, 45% of consumers view it as too much of a hassle to switch.
Currently, many broadband services are switched using the MAC process. This is when the user calls their current provider to obtain a migration authorisation code, which they then pass on to their new provider.
Alternatively, many landline and broadband bundles are switched using the notification of transfer process, where the user calls the new provider, who then contacts the old provider. This will usually involve letters from both providers to the consumer who has 10 days to change their mind (known as the cooling off period).
Through its research Ofcom learned people find the switching process too time consuming and feel that they risk losing their internet connection at some point during the switch.
With 50% of us now choosing internet as part of a 'package' - bundled together with our TV and/or telephone line - Ofcom thinks the switching process could be set to get more complicated.
The regulator has proposed a universal switching process, which would put the onus on the new broadband provider.
"The gaining broadband provider wants to win that business from the consumer so has an incentive to ensure the switching process is as smooth as possible," says Amber Vassiliou, spokesperson for Ofcom.
This could be likened to the process of transferring an individual savings account, which is now chiefly handled by the bank the saver is transferring money to, and has an industry-wide completion standard.
While the ISA transfer process is by no means perfect - there are still some horror stories out there of money held in limbo for weeks - it has improved a lot in the last couple of years, so using a similar model would hopefully have the same effect on broadband switching.
Vassiliou adds the proposal is still in its initial stages and that Ofcom hopes to gain a better idea of what people want, what different providers think and to hear from consumer groups over the next few months. The aim is to release a second consultation on the issue in spring 2011.
Michael Phillips, product director at broadbandchoices.co.uk, says: "Ofcom's latest consultation highlights what we already know. Broadband switching should be as simple as energy or any other utility and the process of using migration authorisation codes is often difficult for customers to understand.
"The 'losing' provider can drag its feet in providing the code and sometimes put people off switching altogether," he adds.
Moneywise is launching a three month campaign to get you broadband justice, tackling all the issues that frustrate you most - slow connection, unreliability and cost. Look out for the first installment in October's issue, which hits newsstands on 28 September 2010.
Also, let us know if you've suffered any broadband nightmares in the comments box below.
The ISA rules allow investors to transfer money from an uncompetitive savings account with one provider into one from another provider that pays a better rate of interest. The bank to which you are transferring the money must do the transfer process, as withdrawing the money from the ISA wrapper means you lose the tax-free status. You can transfer a cash ISA into a stocks and shares ISA, but not the other way around and the current tax year’s cash ISAs must be moved whole to a single provider, but previous years’ ISAs can be split between new providers.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.