Mobile phone carriers and broadband providers have been banned from linking prices to high inflation figures in the middle of a customer’s contract, Ofcom has announced.
New rules from the regulator, confirmed on Friday, will force companies to be upfront by telling their customers in pounds and pence about any price rises included in their contract.
Many major phone, broadband and pay TV companies have changed their terms in recent years to link price rises to future inflation rates.
Ofcom said this “unfairly” puts the burden of shouldering inflation costs onto customers who “cannot predict” inflation and “do not understand (it) well.”
Therefore, the watchdog said: “We have decided to ban this practice.”
The rules will come into effect from January 17, 2025. It is a confirmation of rules that the regulator said it was looking at in December last year.
Explaining why the rules aren’t immediately effective, Ofcom stated: “Some providers require this time to make the necessary changes to their processes and business plans. However, other providers will be able to do it sooner and don’t have to wait for the deadline.
“Indeed, BT and Vodafone have already changed their pricing practices in response to our consultation.”
Ofcom telecoms policy director Cristina Luna-Esteban said: “With household budgets squeezed, people need to have certainty about their monthly outgoings.
“But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.
“We’re stepping in on behalf of phone, broadband and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily and take advantage of the competitive market we have in the UK.”
Citizens Advice has praised the move, before pointing out that “billions” had been added to bills in the time it’s taken to enforce it.
Tom MacInnes, interim director of policy at Citizens Advice, said: “Mobile and broadband customers have faced years of unfair, unpredictable and above inflation mid-contract price rises.
“It’s only right that Ofcom is acting on this. But in the time it’s taken to reach this decision, billions have been added to bills at a time when we know so many are struggling.”
However, Mr MacInnes noted: “While we welcome steps to ban inflation-linked hikes, the announcement today falls short of a full ban on prices rising mid-contract. This means that customers might still end up being caught out by above-inflation rises in April next year.
“Ofcom has also left the door wide open for mobile and broadband providers to sneakily include ‘prices may vary’ small print in their contracts, leaving consumers exposed to wholly unpredictable price rises.
“That’s why we’ve always been clear that fixed should mean fixed.”