Phone and broadband customers penalised £237 million

29 February 2008 / by Rachael Stiles
Home phone customers are paying £237 million over the odds by failing to opt for paperless billing and not paying by direct debit, according to research from uSwitch.com.

A range of other lost discounts and surcharges are disadvantaging some customers, but the way they pay their bills and how they receive them are the two hardest hitting factors.

Since last year, BT has been charging its 2.9 million customers who pay their phone and broadband bill by cash, cheque, debit or credit card a surcharge of £18 per year, a total of £52 million, for the administration involved compared with paying by direct debit.

From April, the 9.4 million customers who receive paper bills rather than online bills will be charged an additional £15 per year more than those who receive them electronically, a collective £141 million a year extra, again, as a result of the additional administration costs involved, but it is also as an incentive for consumers to recognise the potential environmental benefits.

Across the market, the 3.4 million customers not paying for their phone and broadband utilities by direct debit could save themselves £75 million a year, and the 13 million who still receive paper bills could save £162 million by receiving them online instead. In total, uSwitch.com found that a total saving of £237 million could be made if home phone customers changed the way they manage their bills.

Some newer companies, such as Pipex and TalkTalk do not offer their customers the choice of other payment methods – they are only allowed to pay by direct debit, which makes it easier for households to budget, can save them money, and means they don't have to remember to pay the bill or damage their credit rating if they miss payments.

Steve Weller, Head of Communications Services, at uSwitch.com comments: "Some would argue that the additional charges imposed on customers not wishing to pay by direct debit are an unfair penalty. However, some companies, such as Pipex and TalkTalk, do not even give customers the luxury of having a choice – it’s direct debit or direct debit.

"With charges as high as £60 a year, customers should seriously consider whether they wish to continue settling their bills by cash, cheque or card. If they do, they could still cut costs by moving to a company that offers cheaper line rental.

"It would be interesting to see whether the costs incurred by the companies for providing paper billing are proportionate to the excessive charges being levied on customers. While there are clear environmental benefits to receiving bills electronically, only half of the UK has broadband at home and those that don’t are likely to rely on the postal service to receive their bills. Our advice to the 13 million customers being stung by these fees is to compare prices among all the providers to find the best deal for their needs – some companies will still post bills for free."

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