Ofcom tackles price rises on 'fixed' phone and internet contracts

Telecoms watchdog demands 30 days' notice of any rises and a waiver on cancellation penalties

Telephone and internet customers will be able to ditch their provider without penalty if bills are raised mid-contract, following a clampdown by communications watchdog Ofcom.

Customers have been hit by providers raising charges during fixed-term contracts, which typically span 18 or 24-months.

In July, for instance, Virgin Mobile increased prices for existing contract customers by 2.9%, or about 70p on a £25 a month contract.

The regulator has been consulting on how to protect people on contracts from unexpected price rises since January. It said providers must give 30 days' notice that they are increasing prices and that customers must be able to cancel their contracts during this period without incurring a penalty.

The ruling will also apply to businesses with fewer than 10 employees, and will come into force on 23 January. It will apply to any new landline, broadband and mobile contract, including some bundled contracts, entered into after this date.

Under current Ofcom rules, firms are required to give a minimum of one month's notice of any change to their terms that is likely to be of "material detriment", in which case customers must be able to walk away from their contract without penalty. But campaigners said this is not clearly defined.

Claudio Pollack, consumer group director of Ofcom, said: "Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal. 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 are making it clear that any increase to the monthly subscription price should trigger a consumer's right to leave their contract – without penalty."

Richard Lloyd from consumer group Which?, which submitted a formal complaint on the issue of raising prices mid-contract, said the announcement was "an overwhelming victory" for 59,000 people who had joined its campaign.

"Consumers told us price hikes on fixed contracts were unfair, and now people will be able to leave these contracts and switch to a cheaper provider without being hit by extortionate exit fees," he said.

Recently, Which? revealed staff working for O2, Orange, Three, T-Mobile and Vodafone were still not telling customers that prices could increase on fixed contracts, and that 57% of staff were claiming that prices would stay the same.

An Ofcom spokesman said EU law meant the regulator was unable to ban price rises mid-contract completely, but this announcement is aimed at clarifying the problem for consumers.

The regulator added that information about customers' rights should be made clear at the point of sale, including the "cooling-off" period when they can cancel the contract. It said letters or emails about contract or price changes should be clearly marked as such, either on the front of the envelope or a subject header.


Harriet Meyer

The GuardianTramp

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