The telecoms regulator has launched an investigation into whether companies are ripping off mobile and broadband customers by not telling them that they could face bill increases of hundreds of pounds when they sign their contract.
Ofcom will investigate the sales practices used in the UK telecoms market – which is dominated by BT, EE, Virgin Media O2, Sky, Vodafone, Three and TalkTalk – after complaints that customers were not told about mid-contract price rises when they signed up.
Telecoms companies make billions of pounds a year by instituting price rises to mobile and broadband bills midway through contract periods, with many using a mechanism to raise prices annually by the rate of inflation as measured by the consumer prices index (CPI) in January, plus 3.9%.
With inflation running at a 41-year high this means that customers signing up for a new two-year contract offered in some deals currently available over the Christmas period could find themselves paying up to £240 more than they thought.
“As millions of people are having to deal with rising household bills, it is more important than ever that telecoms companies don’t shirk their responsibilities and keep customers fully informed about what they are signing up to,” said Lindsey Fussell, networks and communications group director at Ofcom.
“It is vital that people are told clearly upfront about any future price rises they will face while they are in contract, and we’re investigating to check whether this has happened in practice.”
Ofcom said that after an analysis of complaints it was “concerned” that consumers who took out broadband and phone contracts between March last year and 16 June this year “may not have been provided with sufficiently clear information about in-contract price rises”.
The regulator, which took telecoms to task over mid-contract price rises at a government-led meeting earlier this week, said its rules stated potential future price rises must be set out “prominently and transparently” at the time consumers signed up.
Last month, the Committees of Advertising Practice (Cap) – which write the codes that all UK advertisers have to follow when running ads in any media, from TV and newspapers to billboards and online – finished the consultation stage of an investigation into whether telecoms companies are clearly telling consumers about looming price rises in their campaigns.
