Ofcom: New customer contract rules
February 14, 2020
By Colin Mann
UK phone, broadband and pay-TV customers must be warned when their current contract is ending, and what they could save by signing up to a new deal, under sector regulator Ofcom rules coming into force tomorrow (February 15th).
Around 20 million customers are already out of contract – including 8.8 million broadband customers – and many are paying more than they need to.
Ofcom research reveals that, every day, 25,000 broadband customers come to the end of their contract – usually leading to an automatic price rise.
According to Ofcom, people can earn big savings on their monthly bills if they take advantage of discounts available when signing a new deal. But 16 per cent of broadband customers don’t know if they are in contract, rising to 21 per cent of over-55s.
So Ofcom is introducing rules to ensure people can see whether they are on the best deal. Phone, broadband and pay-TV companies will have to warn customers between 10 and 40 days before their contract comes to an end. These alerts – sent by text, email or letter – must include:
- when your contract is up;
- what you’ve been paying until now, and what you’ll pay when your contract is up;
- any notice period for leaving your provider; and
- your provider’s best deals, including any prices only available to new customers.
Anyone who is already out of contract must also be reminded they are out of contract, and told every year about their firm’s best deals.
In 2019, Ofcom found that out-of-contract broadband customers could save around £100 a year, on average, by agreeing a new deal with their existing provider. Some could save £150 or more, depending on their provider. And this does not include savings people could make on their TV package too.
Around three million out-of-contract broadband customers could actually upgrade to a higher-speed package with their provider and pay less than they do now.
Among mobile customers who buy a handset and airtime bundled together in a single contract, 1.4 million could save money by switching to a cheaper ‘SIM-only’ package at the end of their existing deal. In 2019, Ofcom found that they could save £75 a year, on average; but some could save as much as £150.
Many people will pay fairer prices following commitments Ofcom has secured from mobile operators and broadband providers to cut prices for out-of-contract customers. Most of these are now in effect, with some broadband commitments coming in shortly.
“Millions of people are out of contract right now and paying more than they need to,” notes Lindsey Fussell, Ofcom’s Consumer Group Director. “These new rules make it easier to grab a better deal. But you don’t need to wait to hear from your provider. Just a few minutes of your time could save you hundreds of pounds today.”
Ofcom has launched a new campaign encouraging people to check whether they are in or out of contract, and helping them secure a better deal.
A new dedicated advice hub walks customers through the quick and easy journey of making sure they are not paying over the odds – helping to earn big savings in just three simple steps:
Check your account to see if you are out of contract. You can then use a price comparison site to find the best available deal, and then speak to your provider to see if they will match it.
Around 30 per cent of mobile and broadband customers are not confident in navigating the market and haven’t switched in at least two years. That rises to around 40 per cent among over-55s. So to help people get the right deal for them, Ofcom has made it simpler than ever to shop around and switch.
Last year, Ofcom put in place extra protections for broadband customers – meaning they can walk away from their contract penalty-free if speeds drop below the level they were promised. Ofcom also introduced major reforms allowing mobile customers to switch operator by simply sending a free text message.
This is part of Ofcom’s ongoing Fairness for Customers programme, which is helping to make sure people are treated fairly by their provider at all times.