On 15th December new CAP guidance comes into force on telecoms price advertising, including several principles to help advertisers ensure that their advertising is not misleading. But it looks like there will be new rules from Ofcom on the same topic very soon.

Earlier this year, we wrote about the fact that Ofcom was reviewing if inflation-linked, mid-contract price rises give phone and broadband customers sufficient certainty and clarity about what they can expect to pay. Ofcom was concerned that inflation-linked price rise terms not only make it hard for people to find the best deal, but also make competition less effective. Further, they require customers to assume the risk and burden of financial uncertainty from inflation, with tangible effects on their ability to manage costs.

Ofcom changed its rules in June 2022 to say that providers who specify price rises in contracts must make this clear before customers sign up and launched a related enforcement programme in December 2022.

Ofcom has now launched a consultation proposing to ban telecoms companies from providing for both inflation-linked price rises and price rises that are set out in percentage terms in contracts. Wherever telecoms or pay TV providers apply in-contract price rises, they must set these out clearly and up-front, in pounds and pence, when a customer signs up. It will also have to be clear when such rises take effect.

Ofcom proposes to amend its General Conditions to introduce this rule. Where a telecoms or pay TV company provides for a change to the monthly price of their service during the contract period, they must set that changed price out at the point-of-sale in pounds and pence (the £/p requirement). Providers should also set out when any changes in monthly price will occur. Providers will be required to ensure this information is drawn prominently to customers' attention before they are bound by the contract. The £/p requirement would stop providers from including inflation-linked, or percentage-based, price rise terms in new contracts. 

Providers would be able to increase their prices during the contract period, but any price rises that they write into the contract would need to be set out in pounds and pence, prominently and transparently, at the point-of-sale. 

Ofcom proposes that the requirement would come into effect four months after it publishes its final decision in 2024. This implementation period reflects its concern about the scale of consumer harm that may result from providers continuing to sign customers up to inflation-linked price rise terms, while giving providers sufficient time to make the necessary changes to their processes and business plans.

The consultation ends on 13 February 2024.