Phone companies, broadband providers and subscription TV services will be banned from imposing inflation-linked price increases in the middle of contracts from next year, the telecoms regulator has confirmed.
Under plans being introduced in January 2025, Ofcom will force providers to tell customers upfront, in “pounds and pence”, about any expected rises throughout the duration of their deals.
The move comes after a number of big UK phone and TV providers changed their terms in recent years to include mid-contract rises linked to the retail prices index plus about 4%.
The regulator said this had left customers uncertain about the prices they had to pay, and assuming the risk and financial burden from inflation.
Pressure had grown on the regulator to act after a media campaign, including a Guardian investigation last summer into how the UK’s largest mobile and broadband companies were pushing through the biggest round of price rises for more than 30 years, prompting accusations they were fuelling “greedflation”.
It found that six companies controlling most of the UK telecoms market had charged a 3.9 percentage point supplement on top of their annual inflation-linked increases, meaning millions of customers were facing mid-contract price increases of up to 17.3%.
The regulator later revealed it had received more than 800 customer complaints related to price rises between January and October 2023, double the number of complaints received in the same period in 2021.
In December, Ofcom proposed to ban the practice after it carried out a consultation, with the move being confirmed on Friday.
From 17 January next year, providers must make clear any information about in-contract price rises to the customers before they are bound by a contract, to enable them to make an informed choice. Providers must also set out when any changes to the monthly price will occur.
Cristina Luna-Esteban, Ofcom’s telecoms policy director, 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.”
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Tom MacInnes, the interim director of policy at Citizens Advice, said it was right that Ofcom was taking action but was critical of how long it had taken.
He said: “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.
“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.”