The telecom regulator Ofcom is seeking a ban on inflation-linked price rises being imposed in the middle of customers’ mobile and broadband contracts.
The regulator said it was concerned contracts were not providing “sufficient certainty” to customers due to many firms including mid-contract price hikes linked to future inflation rates, a practice Ofcom believes lacks “sufficient clarity”.
They now want to introduce a new rule to require any future price rises to be written into a contract in pounds and pence at the point of sale, giving customers more certainty over what they will pay during the course of a contract.
The rises were reviewed by Ofcom back in February.
Ofcom said its data revealed that as of April 2023, around four in 10 broadband customers and about 36 million mobile customers were on contracts subject to inflation-linked price rises.
Dame Melanie Dawes, Ofcom’s chief executive, said: “Most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.”
“At a time when household finances are under serious strain, customers need prices to be crystal clear,”
Virgin Media, which recently merged with O2, was the latest company to introduce inflation-linked price rises in May for its landline and broadband services, according to the regulator.
The company hiked prices in step with the Retail Prices Index (RPI) measure of inflation which was 11.3% at the time, as well as an additional 3.9%.
In March, Tesco increased its charges by 10.1%, the Consumer Prices Index (CPI) inflation measure back then, plus the 3.9% additional rise.
BT, Vodafone and EE have also carried out such practices since 2020.
Ofcom revealed it had received more than 800 complaints related to contract price increases between January and October – almost double the amount received during the same period in 2021.
The regulator said it would now consult on the new policy before publishing its final decision in spring 2024.
