Communications regulator Ofcom has leaned on telephone service providers to cut the rip-off charges customers are forced to pay to cancel land-line contracts early. The move applies to land-line telephones and to phone and broadband combinations.
Some charges will be cut by as much as 85 per cent, Ofcom said.
The regulator said it had been "in discussions" with BT, TalkTalk and Virgin Media, to ensure that 'early termination charges' reflect the costs that the providers save by no longer providing the service.
The three protested but have finally agreed to "significantly" reduce those charges for landline and broadband services.
TalkTalk introduced its new charges on 1 June 2010 (except for its Tiscali brand, where charges will change on 1 November 2010). Virgin Media and BT will introduce the new charges in October 2010.
Ofcom expects other land-line providers to apply the same principles and to reduce their early termination charges to similar levels. If they don’t, they could face formal enforcement action.
Ofcom’s Partner for Strategy and Market Developments, Peter Phillips, said: "We very much welcome the reductions made by BT, TalkTalk and Virgin Media which mean that consumers will face much lower charges if they wish to end their contracts early."