Ofcom Protects Consumers And SMBs From Mid-Contract Price Hikes

Consumers and SMBs who enter into a mobile, broadband or landline contract from today will be allowed to exit that commitment without penalty if their provider increases the monthly subscription fee above what was agreed at the time of sale.

Ofcom says service providers will have to give customers 30 days’ notice of any price hike and allow customers to cancel their contract. Any changes should be laid out clearly and transparently in emails or letters.

The new rules only apply to customers’ main monthly payments and not extras such as premium rate phone numbers or additional minutes. However, if an operator reduces a customer’s voice, data or text allowance, this would be treated as a price rise as they will be paying the same amount for less.

Mid-contract price rises

“We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases,” says Claudio Pollack, Ofcom’s consumer group director. “Additionally, our new guide highlights important factors customers might want to consider before entering into a new contract to help them understand exactly what they are signing up to.”

Last year Ofcom admitted it had considered a complete ban on mid-contract price rises, but said this would most likely clash with European laws. The communications regulator says it received 1063 complaints about mid-contract price rises between 1 June 2012 and 31 August 2013, and will monitor the application of the new rules and review complaints that arise.

Many consumers who complain about mid-contract rises said they were unaware of operators’ right to increase prices and believed they were on fixed contracts.

In March 2013, EE announced it was increasing a number of T-Mobile and Orange customers’ monthly payments by 79p due to ‘rising business costs’, claiming it was perfectly entitled to increase the amount charged at the same time as the Retail Prices Index, which measures inflation.

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