Providers will be forced to be clearer about price hikes, as well as let customers leave if they introduce additional charges.
If you’ve been notified by your broadband or phone provider of bill rises recently, you’re certainly not alone.
A succession of big names have announced price hikes in recent months, generally ‒ although not always ‒ tied into the rate of inflation.
It’s a piece of small print in our broadband and mobile contracts that many of us overlook, but which has the potential to upset our budgeting.
In a bid to tackle this, new rules are being introduced that not only push providers to be clearer about the potential for inflation-related bill hikes, but also make it easier to leave your provider if they do something that isn’t to your benefit.
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Understanding price rises
New rules set out by the communications regulator Ofcom has now come into force, which requires broadband and phone firms to provide their customers with clearer information about their contract at the outset.
The rules require providers to put together a one-page summary of the main contract terms, before entering into that contract.
This one-page breakdown has to include clear examples of how any price increases will impact the actual size of a customer’s bill.
The idea is that this will mean that people aren’t caught out by price rises they weren’t expecting, particularly at a time like this when household budgets are so stretched.
For example, it’s common for communications firms to have it written into their contracts that they can hike bills each year by the rate of inflation.
Those firms will now have to demonstrate exactly how that might work, using the most recent inflation figure, to set out in pounds and pence what a customer’s new bill might look like.
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Making it easier to leave your contract
The summary document also has to set out key information about the service you should be getting.
That includes features like the speed of the service, the length of your contract, and the terms and conditions should you want to leave early.
In addition, the new regime means it should be easier to leave your contract if your supplier makes changes to your terms that you didn’t agree to at the beginning of your contract, and which are not clearly to your benefit.
An example might be if your provider hikes the cost of paper billing. Doing so may be good for the planet (eventually), but it’s not good for you in the short term.
Under the new rules, not only would the provider need to give you a month’s notice of the rising cost, but they would also have to allow you to leave your contract without paying an exit fee, even if you were in the middle of your deal.
This is crucial, in that broadband and phone firms are now going to have to think really carefully about any changes they make which will cost us, their customers, more.
If the providers don’t make these changes clear at the outset, then introducing them will make it easier for customers to walk away and take their business elsewhere.
What am I signing up for?
I think these new Ofcom rules are a sensible step forwards. If we are being honest, the vast majority of people don’t read each and every line of the contracts they sign when snapping up a broadband bundle or a mobile phone package.
While apathy is a factor here, there’s also clarity. The way in which these contracts are written is often far from clear, with the potential you leave you more confused about where you stand than when you began.
I’ve always liked the Fairer Finance campaign, which pushes financial services firms to rewrite their terms and conditions in a clearer way, so that people are then more likely to engage with them and understand what they are signing up for.
By breaking down these walls and putting ordinary customers in a more informed position, companies are less able to sneak extra charges in, or find ways to milk customers for more cash unfairly.
Essentially, it’s shining a light on the way our communications providers behave, and forcing them to treat you and me with a little more respect.
The key now is for customers to engage with these summary pages, so that any inflation-linked price rises are not a surprise.
High levels of inflation are not going away any time soon, so it’s really important for all of us to prepare for such bill hikes, and include them in our considerations when shopping around for a new package.
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