New regulations mean that mobile, broadband, and pay TV firms cannot initiate unexpected price increases during the course of a customer’s contract. Prior to agreeing to a contract, suppliers must inform customers “in pounds and pence” about any future price increases and when they will occur. The move comes in response to rising customer complaints to regulator Ofcom, which cited large, unanticipated price increases during a period of increasing energy and other bills, which left many unable to budget properly.
The move was broadly supported, although Citizens Advice has said it falls short of the complete ban they were seeking on mid-contract price rises. Many telecoms companies had already added inflation-linked price rises to contract terms that existed during the course of contracts. This was generally additional to a 3.9% standard increase. Citizens Advice Director of Policy, Tom MacInnes, noted that during the period of determining the new regulations, billions were added to bills in circumstances where many were struggling to make ends meet.
Ofcom Director for Networks and Communications, Natalie Black CBE, said, “more than ever, households want and need to plan their budgets.” She added that the new regulations would prevent unpleasant surprises. Customers will know how much they will have to pay in advance, and if there are likely to be price increases, they will know when they will happen. Prices must be shown prominently in both sales calls and in-store. It was deemed unfair to expect customers to budget for surprise price rises linked to inflation, which can be volatile and challenging to predict.
Ofcom has been investigating the issue of mid-contract price increases since 2003. As of April 2024, roughly 6 in 10 mobile and broadband customers were subject to contracts with inflation-linked price rises. The regulator concluded that unfair communication of such increases could “diminish consumer engagement, undermine confidence in the market, and weaken competition.”
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