Hi,
This problem has only recently started happening. At the start of each race, there is severe lag where both frames and sound stutter really badly until the first corner. It doesn't respond to my controls during the freeze moments either.

Does anyone know what might be causing this problem?

yes, its either network lag or hardware lag, an easy way to test which one you suffer from is to play single player with a full grid, if you lag then its hardware lag.

Hmm, no it only happens online.

Quote from -Steed- :

Hmm, no it only happens online.

So network lag: try to drive on servers 'close' to home.
Users of dial up internet/slow connections are no strangers to network lag.

I used to drive on servers in the UK when I was in Dubai..that's 3000 miles and I had no issues like this.

Now I'm in the UK and driving on UK servers with 33 ping, and all was fine until a few days ago.

Also, it's not normal lag where the cars stop for a few seconds and then 'warp' further down the track. The entire screen freezes along with the sound for about half a second and then restores for half a second.