Individuals and businesses will be allowed to leave their landline, broadband or mobile contract without a penalty if their provider increases the cost their monthly deal. Ofcom announced on Wednesday that it will instruct providers how to interpret and apply, telecoms sector rules with regard to price rises during fixed-term contracts.
Ofcom also confirmed the cancellation rights it expects providers to offer consumers in the wake of price rises.
The new guidance sets out:
- Ofcom is likely to regard any increase to the recurring monthly subscription charge in a fixed-term contract as ‘materially detrimental’ to consumers;
- providers should therefore give consumers at least 30 days’ notice of any such price rise and allow them to exit their contract without penalty; and
- any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently to consumers.
The decision comes in the wake of a consultation on providing consumers with a better deal in relation to price rises during fixed-term contracts.
Claudio Pollack, Ofcom’s consumer group director said:
Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal. We think the sector rules were operating unfairly in the provider’s favour, with consumers having little choice but to accept price increases or pay to exit their contract.
We’re making it clear that any increase to the monthly subscription price should trigger a consumer’s right to leave their contract – without penalty.