New Rules Ban Surprise Mid-Contract Price Rises for Mobile and Broadband Users
As of January 17, 2024, mobile phone, pay TV, and broadband companies are no longer allowed to implement unexpected price increases during the term of a contract. This significant change aims to protect consumers from unforeseen financial burdens.
What’s Changing?
From January 17, any new contracts must include a clear and detailed explanation of any potential mid-contract price increases at the point of sale. Companies are now required to specify these increases "in pounds and pence," ensuring that customers have a transparent understanding of their financial commitments.
Why the Change?
The decision comes in response to a surge in customer complaints about substantial and unexpected price hikes, particularly during a period of rising living costs. In recent years, many telecoms providers had introduced contract terms allowing for price increases linked to inflation, typically adding a 3.9% standard increase on top. This made it difficult for customers to budget effectively, as they could not predict future price rises.
Ofcom’s Stance
Ofcom revealed that, as of April, about six in 10 broadband and mobile customers were on contracts subject to inflation-linked price rises. Many customers were unaware of the rates of inflation, which track the rising cost of living, making it challenging to estimate the impact on their payments.
Cristina Luna-Esteban, Ofcom's telecoms policy director, emphasized the need for financial predictability for consumers. “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," she stated.
She continued, “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.”
Competitive Market
While some providers were already offering fixed-price deals, which Ofcom described as a competitive market, the new regulations aim to standardize transparency across the board, making it easier for customers to compare and choose the best deals.
Consumer Group Reactions
Consumer groups had mixed reactions to the change in rules. Tom MacInnes from Citizens Advice criticized Ofcom for the time it had taken to reach the decision. He noted that billions of pounds had collectively been added to bills while many people were struggling.
“While we welcome steps to ban inflation-linked hikes, the announcement falls short of a full ban on prices rising mid-contract," he said. “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.”
The Consultation Process
This initiative, first proposed in December, has undergone a thorough consultation process before being implemented. The move is designed to enhance consumer protection and ensure that the telecommunications market remains fair and competitive.
What Does This Mean for You?
For customers entering new contracts from January 17 onward, this change means greater financial transparency and stability. You'll know exactly what you're agreeing to pay throughout the duration of your contract, without the worry of unexpected price hikes.
Stay Informed
At Citizens Advice Lancashire West, we are committed to keeping you informed about important changes that affect your financial wellbeing. For more information on how these changes might impact you, or for advice on other consumer rights issues, please contact us or visit our website.
By staying aware of these regulatory changes, you can make more informed decisions and manage your finances more effectively.