The super-complaint from the Citizens Advice Bureau claiming that customers who stay with the same supplier for household services are overpaying £4.1 billion a year could just be the tip of the iceberg, new research reveals.
According to ismybillfair.com data, a website which allows you to compare bills with the costs of others, broadband customers are overpaying by an average of £230 per year compared to the best current deal available from their provider.
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This is more than double the £113 figure estimated by Citizens Advice.
This means they are paying £3.94 billion per year in loyalty penalties, with four out of five households paying more than they should.
The figures are based on real life bill data submitted by over 30,000 broadband customers.
However, the situation may be even worse. Many broadband customers typically stay with their provider for seven years, which means they could be stung with an overpayment of £1,380 during this period.
The data has been handed over to the Competitions and Markets Authority (CMA) to help support its investigation into the overcharging of customers.
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Earlier this year, research from Citizens Advice found that consumers are being ripped off to the tune of £4.1 billion a year by businesses that take advantage of their loyalty.
The so-called loyalty penalty occurs when customers of a business pay higher costs year-on-year for staying with the same product, while new customers of the same business pay significantly less.
Citizens Advice says consumers are being ripped off with a loyalty penalty for broadband, home insurance, mortgages, mobile phone contracts and savings.
The charity has submitted a super-complaint to the CMA demanding the regulator outlines a plan to fix the problem.
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Alex Perrin, chief executive of ismybillfair, says: “The super-complaint, triggered by Citizens Advice’s brilliant loyalty report, is a step towards bill justice for millions of people - many of whom are amongst the most vulnerable in society.”
He adds: “We’re very confident the super-complaint will lead to industry change. But investigations are rarely quick, and for every day it continues 17 million households are paying £10.8 million more than they need to.”