Ofcom says service providers must make customers aware of mid-contract price hikes and their right to cancel
Ofcom says consumers and SMBs will be allowed to exit their broadband, landline or mobile contract without penalty if their service provider increases the cost of their monthly deal.
The telecoms regulator says operators must make customers aware of the possibility of mid-contract price hikes before an agreement is entered, as well as their right to terminate the deal if such rises occur. Any changes must be preceded by at least 30 days’ notice in the form of clear and transparent emails or letters.
The new guidelines follow an Ofcom consultation on how to give consumers a fairer deal with regards to price increases, will come into effect within three months and apply to any contract agreed after that date.
Ofcom termination rules
The new rules only apply to customers’ main monthly payments and not extras such as premium rate phone numbers or additional minutes. However, if an operator reduces a customer’s voice, data or text allowance, this would be treated as a price rise as they will be paying the same amount for less.
Ofcom says until now, service providers have been far too inconsistent with regards to their treatment of customers, as some have been able to exit their contracts following price rises and others not.
“Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal,” promised Claudio Pollack, Ofcom’s consumer group director. “We think the sector rules were operating unfairly in the provider’s favour, with consumers having little choice but to accept price increases or pay to exit their contract.”
“We’re making it clear that any increase to the monthly subscription price should trigger a consumer’s right to leave their contract – without penalty,” said Pollack.
Earlier this year, Ofcom admitted it had considered a complete ban on mid-contract price rises, but said this would most likely clash with European laws.
Ofcom received 1,644 consumer complaints on changes to terms and conditions between September 2011 and May 2012. Many complainants noted they were not made aware of price hikes, believing they were on fixed contracts.
In March, EE announced it was increasing a number of T-Mobile and Orange customers’ monthly payments by 79p due to ‘rising business costs’, claiming it was perfectly entitled to increase the amount charged at the same time as the Retail Prices Index, which measures inflation.
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