Recently, you might have seen clauses like this in your mobile or broadband contracts:
"In April 2023 your price will increase by an amount equal to the RPI rate published in March of that year. Using May 2022’s RPI value of 7.8%, this would mean your monthly price of £40 would increase to £43.12 from April next year."
Rather than containing a fixed price, many contracts for mobile and broadband services now provide for price increases (usually linked to inflation) during the term of the contract. In September we wrote that CAP and BCAP were consulting on guidance that would require information about mid-contract prices to be more prominently stated in telecoms ads across media, to avoid misleading consumers. That consultation ended in November and we are awaiting the outcome.
In the meantime, Ofcom has published its latest tracker about the affordability of communications services. It says that 9.1 million UK households (32%) are having problems paying for their phone, broadband, pay-TV and streaming bills. As a result, Ofcom has launched an industry-wide enforcement programme, asking if in-contract price rises were set out clearly enough before customers signed up.
Having analysed customer complaints and other preliminary evidence, Ofcom is concerned that consumers who took out contracts between 1 March 2021 and 16 June 2022 may not have been provided with sufficiently clear information about in-contract price rises, which are usually applied in March or April each year.
During that period, Ofcom's rules set out that if a provider included potential future price rises in the terms of a contract, they had to be set out prominently and transparently at the point of sale. If the customer hadn’t agreed to those terms when signing up – because they hadn’t been made sufficiently prominent and transparent – providers should have notified them of the price increase and offered them a right to exit penalty-free.
It is now investigating what happened in practice. It is collecting further information from a range of providers to assess the steps they have taken to make these terms prominent and transparent. If it identifies specific issues with providers complying with its rules, it says that it may launch separate investigations into individual providers.
Ofcom introduced further rules and guidance in June 2022, so providers need to ensure that they are now complying with those. The rules say that if the contract contains a price variation clause, the providers should set out an example estimate in the contract summary and contract information of how an inflation increase will affect the customer’s future monthly price. In addition, there are general consumer protection rules which provide that information given to consumers must be clear and not mislead them into taking a transactional decision that they otherwise wouldn’t have done.
It’s vital that people are told clearly upfront about any future price rises they will face while they are in contract, and we’re investigating to check whether this happened in practice