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Cash Payments

Volume 691: debated on Monday 16 April 2007

asked Her Majesty’s Government:

Further to the Written Answer by Lord Truscott on 19 February (WA 188), whether they will consider the implications of the decision by British Telecom to introduce a penalty charge of £18 per annum on customers who pay their bills by cash rather than by direct debit; and whether such discrimination against those who use notes and coins is legal. [HL2342]

For a number of years, BT has applied a price differential between customers who pay their accounts by direct debit and those who pay by other means. This reflects the increased processing and debt management costs associated with payments not made by direct debit. Such differentials are common practice among communications providers and utility service providers.

From 1 May 2007, BT is changing how it presents this differential from a discount for those customers paying by direct debit to a charge for those paying by other means. BT has combined this change with an increase of £1.50 a quarter in the charge (from £3 to £4.50).

The Light User Scheme, In Contact and BT Basic will not be affected by the increased charge. These are the special tariff schemes offered to vulnerable customers by BT as a result of the universal service obligation placed on the company.

I understand the concerns expressed and I have raised the matter with the chief executive officer of the independent regulator, the Office of Communications (Ofcom). Ofcom is considering whether any of the changes that BT has recently made raise any regulatory issues.