Mobile phone, broadband and pay-TV companies will no longer be allowed to grant surprise price increases in the middle of a customer’s contract as a regulator ban comes into force.
In Friday’s new deals, before anyone agrees to a contract, suppliers must inform them “in pounds and pence” of any price rise, as well as when it will occur.
It follows numerous complaints to Ofcom about large and unexpected price rises at a time when energy and other bills were soaring, meaning customers could not plan their budgets properly.
But Citizens Advice said the move does not amount to a total ban on mid-contract price rises.
Many telecommunications companies have already changed the terms of their contracts in recent years to include inflation-related price increases in contracts. This was generally in addition to a standard increase of 3.9%.
“In the time it has taken to get to this point, billions have been added to the bills at a time when we know so many people are struggling,” said Tom MacInnes, policy director at Citizens Advice.
“It is already clear that there will be customers who end up seeing their bills not only exceed inflation, but potentially more than in the previous model.”
Meanwhile, Ofcom’s director of networks and communications, Natalie Black CBE, said that now, “more than ever, households want and need to plan their budget”.
“Our new rules mean there will be no surprises and customers will know how much they will pay and when, thanks to clear labelling.”
Ofcom said it was unfair to expect customers to adapt to surprise price rises linked to inflation, which measures price rises over time and “can be incredibly volatile and …difficult to predict.”
Providers must now display information about increases “prominently” to customers, both during a sales visit or in store.
Ofcom began investigating the issue in 2003 and said in its final report that “unfairly” communicated price increases “could diminish consumer engagement, undermine confidence in the market and weaken competition.” .
According to the report, as of April 2024, around six in ten broadband and mobile customers were on contracts subject to inflation-related price increases.
