Ofcom tackles mid-contract price rises
December 12, 2023
By Colin Mann
Telecoms customers must be told upfront in pounds and pence about any price rises their provider includes in their contract, under new consumer protection plans set out by regulator Ofcom.
With most major phone, broadband and pay-TV companies now including mid-contract price rises linked to uncertain future inflation, Ofcom is concerned that customers’ contracts do not provide sufficient certainty about the prices they will pay.
To tackle this problem, Ofcom propose to introduce a new rule requiring that any price written into a customer’s contract would need to be set out in pounds and pence, prominently and transparently, at the point of sale. That includes being clear about when any changes to prices will occur.
This would prevent providers from including inflation-linked, or percentage-based, price rise terms in all new contracts.
Ofcom is consulting on this proposed new requirement until February 13th 2024, and plans to publish its final decision in spring 2024.
Enforcement action
Separately, Ofcom has been investigating whether phone and broadband companies complied with its previous rules between March 2021 and June 2022. Ofcom has found that a small number of providers may not have given some customers clear information about price rises at the right time, creating a potential compliance concern.
Ofcom has discussed these concerns with the relevant providers and secured refunds for some affected customers. Ofcom will continue to discuss its remaining concerns with these providers, escalating to separate, targeted enforcement action if necessary.
Social tariff take-up doubles in a year
Ofcom has also today published its annual Pricing Trends report, which this year includes the latest take-up and awareness figures for social tariffs.
Take-up of social tariffs increased to 380,000 in September 2023, up from 147,000 a year earlier, meaning more customers are benefitting from the savings the tariffs offer. However, awareness among eligible customers remains a challenge.
For the first time, Ofcom has published take-up figures for each of the largest providers of broadband social tariffs.
Responding to the proposed new requirement, Tristia Harrison, TalkTalk Group CEO, said: “For 20 years TalkTalk has focused on delivering value for customers in the vibrantly competitive UK broadband market. If Ofcom is to push ahead with tying industry’s hands on CPI indexed price inflation, we urge them to urgently review similar CPI inflation for BT Openreach at a wholesale level. The link between the two is obvious; is essential for protecting both consumers and competition, and needs addressing.”