Ofcom has unveiled sweeping new powers that will allow consumers and small businesses to cancel mobile, broadband and landline contracts if a price rise is imposed halfway through the contract term.
The results of an Ofcom review showed that consumers were being caught unaware by price rises in what were considered fixed price contracts and the new guidance to providers, which kicks in immediately, is looking to address this.
“We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases,” said 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.”
Under the new terms the provider is required the inform customers a month prior to imposing a rise in the monthly subscription price and that will give subscribers the chance to exit the contract without penalty. Any other changes to the contract terms, pricing or otherwise must also be communicated clearly to the customer.
“This is good news for mobile phone customers, and the 60,000 people who supported our campaign against unfair price rises in fixed contracts. People can now be confident that the price really will be fixed when they sign a mobile contract, or they can walk away without a steep penalty if faced with a hike,” stated Which? executive director Richard Lloyd. “We’ll be keeping a close eye on the mobile phone industry to make sure it follows this guidance and gives customers clear information about contracts at the point of sale.”
The new rules concern any new broadband, mobile or landline contract, including some that are bundled, which are signed after today’s date and apply to residential customers as well as small businesses that have 10 employees or less.