By D. Maan, Jadetimes News
Surprise mid contract price hikes for mobiles, pay TV and broadband banned
Mobile phone, pay TV and broadband firms can no longer catch customers out with price rises during a contract term from 17 January. Providers must notify customers of any price changes that could see prices rise mid contract, at point of sale, and spell out the actual sums involved in a "clear and understandable" way under Ofcom's new rules.
This regulatory change comes on the heels of a surge in customer complaints about sudden, unexpected price rises at a time when the cost of living was already increasing. According to Ofcom, many telecom firms have changed the terms of contracts recently to include inflation-linked price rises, usually in addition to another standard rise of 3.9%. Because of this, customers could not budget effectively due to uncertainty over the extent to which prices may rise.
Ofcom's policy director in charge of telecoms, Cristina Luna Esteban, said financial certainty was the key. "People need to have certainty about their monthly outgoings. But that's impossible if you're tied into a contract where the price could change based on something as hard to predict as future inflation.". We are stepping in to protect phone, broadband, and pay TV customers from this practice, so that people can be certain of their price, compare more easily, and actually get the benefits of the UK's very competitive market.
The decision, recommended in December, has gone out to consultation before its finalization. Already, by April, some 60% of broadband and mobile customers were reportedly on contracts containing inflation linked price rises with many having no idea about inflation rates or what they could mean for payments. That said, due to fierce market competition, some providers had already moved to fixed price deals.
Consumer groups welcomed the new rules but said they still had concerns. Tom MacInnes of Citizens Advice attacked the time it had taken to reach the decision, saying billions of pounds had been added to bills at a time when many consumers were feeling a financial squeeze.
"While we welcome steps to ban inflation-linked hikes, the announcement falls short of a full ban on prices rising mid-contract," said MacInnes. "Ofcom has also left the door wide open for mobile and broadband providers to sneakily include 'prices may vary' small print in their contracts leaving consumers exposed to wholly unpredictable price rises. That's why we have always been clear that fixed should mean fixed."
In other words, Ofcom's new regulations clarify and predict pricing in contracts, hence giving consumers effective planning and a more competitive market environment.
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