Ofcom to allow customers to leave broadband and phone contracts without penalty

The rules are changing on how and when you can leave a contract if a price rise is announced.

Mobile phone, landline and broadband customers will be allowed to leave a provider mid-contract if it pushes up the price of bills, the regulator Ofcom has confirmed.

It says a mid-contract price hike could be “materially detrimental” to customers and they must be given at least 30 days’ notice of one.

They will then be allowed to quit the contract if they don’t agree with the increase, without facing a penalty.

Mid-contract changes

The changes will come into force in three months’ time and will affect anyone with a new landline, internet or mobile phone contract started after this time. Other changes to contracts must also be communicated “clearly and transparently”.

The new rules have come about after a consultation into how to give customers a better deal with regards to mid-contract price rises. It’s also hoped the changes will give the likes of you and me more flexibility to switch providers.

If you're not signed up to a monthly contract, the rules still apply. If something changes in the monthly bundle, such as the number of allocated minutes, texts or data being reduced, you should also have the option of leaving to go to another provider.

But the rules don’t apply to price changes to services outside of a monthly contract allowance. These include charges for exceeding a monthly inclusive allowance and the cost of calling non-geographic phone numbers.

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Lack of transparency

Many of us are currently not being given enough information about the possibility of mid-contract price rises when signing up to a new contract. As a result many have been caught unawares by these rises,  and not been given correct information about how to exit a contract they’re no longer happy with.

Emails and letters with information about price changes should make it obvious what they’re about in a subject header or on the front of the envelope.

Information about how customers can leave contracts and details about the initial “cooling-off” period also need to be clear and upfront – preferably on page one of a letter regarding this.

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Price rises

BT and Sky have just announced price hikes for the next year.

Sky, for example, has put prices up twice in the past two years. In 2012 it increased line rental 18% and Sky Talk landline call rates to 7.98p, from 7.6p. It then announced another rise of 6.2% in line rental, which will come into effect on 1st December 2013.

BT has increased prices three times over the same period. It started with a rise of 5% in the cost of line rental in September 2011 along with various increases to its broadband services. Then in September 2012 it announced another line rental rise of 5.8% and broadband increases of 5.9%. Most recently last month it said it was putting up line rental costs again by 3.5%.

Ofcom's move doesn’t prohibit providers from pushing up contracts, but it may discourage them from making these increases on a regular basis.

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