Ofcom bans ‘surprise’ mid-contract price rises linked to inflation
Telecoms customers must be told upfront in about any price rises their provider includes in their contract, under new consumer protection rules announced today by Ofcom.
In recent years, many major UK phone, broadband and pay TV companies have changed their contract terms to include price rises that are linked to future inflation rates.
This leaves customers without sufficient certainty and clarity about the prices they will pay, and unfairly assuming the risk and burden of financial uncertainty from inflation, which is something people cannot predict and do not understand well.
According to Ofcom’s research, more than half of broadband customers (55%) and pay monthly mobile customers (58%) do not know what inflation rates such as CPI and RPI measure. And of those who are with providers that use inflation-linked price rises, very few broadband customers (16%) or mobile customers (12%) are both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.
Under new Ofcom rules announced today, any price rise written into a customer’s contract from January 2025 will need to be set out in pounds and pence, prominently and transparently, at the point of sale; and providers will need to be clear about when any changes to prices will occur.
Example of how the £/p requirement will apply
Over the last five years, average prices for broadband and mobile services in the UK have fallen in real terms. At the same time, companies have been investing in upgrading their networks, with the availability of full fibre increasing tenfold and average speeds and data use doubling.
This is a result of the UK’s competitive telecoms markets, in which providers set their own prices. Customers can choose from a range of different types of packages, and several providers offer fixed-price contracts.
From 17 January 2025, phone, broadband and pay TV providers will be prohibited from including inflation-linked, or percentage-based, price rise terms in all new contracts. This means consumers will be able to enter into contracts featuring £/p information ahead of annual price rises in 2025.
Some providers require this time to make the necessary changes to their processes and business plans. However, other providers will be able to do it sooner, and don’t have to wait for the deadline. For examaple, BT and Vodafone have already changed their pricing practices in response to Ofcom’s consultation.
