BT charges 'will hit needy'

Customers who pay by direct debit will save £1 a month

British Telecom, the UK's biggest phone provider, is to penalise customers £12 a year if they do not pay their phone bills by direct debit.

The extra charge, which comes into effect from 1 November, will be made up of two parts.

First, customers who don't pay by direct debit will be penalised 51p a month for line rental, a total of £6.12 a year.

In addition, those who do pay by direct debit will receive a 49p a month (£5.88 a year) discount.

This means customers paying by direct debit will save a total of £1 a month, or £12 a year.

The decision has drawn criticism from both consumer and old age groups who say that the changes will increase the phone bills of poor and elderly people.

A spokeswoman for Age Concern, a UK charity that advocates elderly rights, said: "While the majority of BT customers may benefit from this move, those on low incomes who cannot pay by direct debit, many of whom are older people, will not only lose out but pay extra money they can ill afford."

Penalty

Discounts for people who pay utility bills by direct debit are common - gas and electricity providers have offered such deals for some time.

But BT is the first company to directly penalise customers that do not switch to direct debit to make payments.

BT spokesman Damian Peachey: "This is about being fair to all our customers."

BT spokesman Damian Peachey said: "This is about being fair to all our customers.

"The processing costs of direct debit are much lower so we can pass those on to our customers, but for customers who choose to pay by other methods the costs are higher so there is a slight increase in the monthly bill."

BT says more than five million of its customers pay by direct debit.

The change in tariff was announced in a BT customer letter dated August 2001.

The letter says: "From 1st November 2001 you can save 49p per month on your line rental or BT Together Package by paying by Monthly Payment Plan or Direct Debit.

"Customers not paying by Monthly Payment Plan or Direct Debit will see an increase in their line rental or BT Together package fee of 51p per month."

BT's Monthly Payment Plan allows customers to pay a single monthly tariff based on their previous year's phone bill.

All payments on the plan must be made by direct debit.

No preference

According to financial watchdog the Financial Services Authority (FSA), 17% of people in the UK do not have access to current accounts.

The problem is that it hits the poorest consumers hardest

Allan Williams, Consumers' Association

Experts have warned that many more people are likely to pay the increased phone bills, either because they have failed to notice the change or are unwilling to pay by direct debit.

Allan Williams of the Consumers' Association said: "The problem is that it hits the poorest consumers hardest.

"It hits those people who don't have access to a bank account so they cannot pay by direct debit.

"Importantly, these customers do not have the option to switch to another provider because there is very little competition or choice for those who do not spend a lot on phone calls."

Over the past year the government has focused on decreasing the number of people who do not have access to banking facilities.

It has ordered High Street banks to offer basic current accounts tailored to the poor and elderly and unveiled plans for a post office based bank targeting the same groups.

Within its rights

It is unlikely that BT will be forced to change its plans.

The government communications watchdog Oftel said BT was within its rights to change the charging structure.

It said: "BT does not, except in certain circumstances which are not relevant here, require Oftel's approval to introduce price changes.

"On the assumption that BT does go ahead with the planned price changes, and on the basis of the evidence Oftel now has, we do not believe that any preference or discrimination between customers could be considered as being undue."