Ofcom to clamp down on mid-contract mobile price hikes

News 3 Jan, 2013

Comms regulator wants consumers to be able to shop around for cheaper deals, without being penalised.

Ofcom wants to introduce measures that will make it less costly for consumers to cut short phone and broadband contracts with providers that hike their prices.

Many of the major mobile operators have increased the price of their services in recent times, while O2 plans to up its prices from the end of next month.

End users that want to switch to cheaper providers are often charged a severance fee by their incumbent operator, if they chose to go elsewhere during their current contract term.

Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises.

This is something Ofcom is keen to stamp out with the launch of its new consultation, which aims to protect consumers from price rises during fixed contracts for landline, broadband and mobile services.

In a statement, the comms regulator explained: “Ofcom proposes to...allow consumers to withdraw from a contract without penalty, if providers increase prices during the contract term.

“While it would allow communications providers to increase prices during a fixed-term contract, consumers would be free to leave the contract if they did not wish to accept the rise.”

The organisation revealed it has also considered a “complete ban” on fixed contract price rises, but dropped this proposal over concerns about how it would square with European laws.

Claudio Pollack, Ofcom’s consumer group director, said: “Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts.

“Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises,” Pollack added.

The consultation is expected to close on 14 March 2013, and – until then – Ofcom will be garnering feedback from stakeholders.