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Phone, broadband and pay-TV companies are to be banned from imposing mid-contract price increases linked to inflation following a new crackdown announced by the Ofcom.
Under the new consumer protection rules telecoms customers must be told upfront in pounds and pence about any price rises their provider includes in their contract,.
Ofcom says that in recent years, many major UK phone, broadband and pay TV companies have changed their contract terms to include price rises that are linked to future inflation rates. This leaves customers without sufficient certainty and clarity about the prices they will pay, and unfairly assuming the risk and burden of financial uncertainty from inflation, which is something people cannot predict and do not understand well.
Ofcom has announced the change to ban this practice under the new Ofcom rules, any price rise written into a customer’s contract from January 2025 will need to be set out in pounds and pence, prominently and transparently, at the point of sale; and providers will need to be clear about when any changes to prices will occur.
Cristina Luna-Esteban, Ofcom Telecoms Policy Director said “With household budgets squeezed, people need to have certainty about their monthly outgoings. But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.
“We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.”
Tom MacInnes, Interim Director of Policy at Citizens Advice, said “Mobile and broadband customers have faced years of unfair, unpredictable and above inflation mid-contract price rises. It’s only right that Ofcom is acting on this. But in the time it’s taken to reach this decision, billions have been added to bills at a time when we know so many are struggling.
“While we welcome steps to ban inflation-linked hikes, the announcement today falls short of a full ban on prices rising mid-contract. This means that customers might still end up being caught out by above inflation rises in April next year.
“Ofcom has also left the door wide open for mobile and broadband providers to sneakily include ‘prices may vary’ small print in their contracts, leaving consumers exposed to wholly unpredictable price rises. That’s why we’ve always been clear that fixed should mean fixed.”