Ofcom aims to tackle mid-contract price rises



Ofcom wants new rules that will allow consumers to exit their mobile, landline, or broadband contract without penalty if their provider raises prices part way through its term.

The “exit without penalty” clause is the central proposal in a new consultation document, released this week, which aims to better protect consumers from mid-contract price rises.

There has been a sharp rise in complaints to Ofcom about the practice over the last 18 months on the back of several price hikes from mobile operators.

Presently, most mobile providers’ terms and conditions allow price rises though these are often hidden away in the small print. And while customers are able to leave mobile phone contracts early, this often involves paying a large proportion of the remaining contract in one lump sum.

Ofcom’s proposed approach

Among the options put forward, Ofcom’s favoured approach is to intervene to allow consumers to exit their contract without penalty if their provider introduces any price increase during the term of the contract.

Alongside the exit without penalty clause, Ofcom would expect providers to be clear and upfront about the potential for price increases and of the consumer’s right to cancel the contract in the event of any price increase.

The consultation follows an Ofcom review into the fairness of certain contract terms.

This proposed change would address consumer concerns that it is unfair that providers are currently able to raise prices, while they themselves have little choice but to accept the increase or pay a penalty to exit the contract.

Next steps

The proposals are out for consultation, which closes on 14 March, and can be viewed on the Ofcom website.

A decision is expected in June. If adopted, the amended rules would come into effect three months later.

James Stinson is a Regulatory Affairs Manager at Ofcom