Roadbands firms have been urged to reduce fines for customers leaving mid-contract amid concerns of an imminent “exorbitant” price hike or withdrawal fee of more than £200.
Millions of broadband and mobile phone customers can expect to face an increase in monthly bills of at least 14% from April.
Providers often link their annual price increases to January’s Consumer Price Index (CPI) or Retail Price Index (RPI). Despite a slight easing this month, both are near 40-year highs, with the latest CPI at 10.5% and RPI at 13.4%.
BT, EE, Plusnet and Vodafone allow broadband contract prices to rise by up to CPI plus 3.9%. In TalkTalk, it is CPI plus 3.7%, while Shell Energy can add CPI plus 3%. Sky and Virgin Media contracts allow for mid-contract price increases but they do not set out pricing formulas like rivals.
BT confirms 14.4% growth this year – CPI 10.5% plus 3.9%.
which? Warned that many customers saw their broadband bills rise by around 10% last year, it is “another blow” for those who want to keep rising costs under control.
Ofcom’s rules state that telecom providers must give their customers the right to opt out of their contracts if they are subject to an unexpected price increase that is not provided for in their contract.
But because mid-contract price increases are written into the terms and conditions of some people’s contracts, Ofcom’s rule is that in those cases the customer does not have the right of penalty-free exit – meaning they have to pay the new higher price increase. There is no option but to accept. Price or pay an exit fee to terminate their contract.
However, the rules require the relevant terms to be prominently and transparently stipulated at the point of sale. Ofcom is currently investigating whether in-contract price increases by phone and broadband companies were set out clearly enough before customers signed up.
which? It is calling on all providers to carefully assess “what level of mid-contract price increases can be justified in the current economic climate”.
Rocio Concha, which one? Director of Policy and Advocacy said: “It is of great concern that many broadband customers may find themselves trapped in a lose-lose situation, where they either have to accept excessive – and find it difficult to justify – – A mid-contract price increase this spring or paying an expensive exit fee to leave your contract early and find a better deal.
“Which? is calling on providers to let their customers go without penalty if they face a mid-contract price increase. Providers should carefully consider the level of any price increase when many consumers are already has been under severe financial pressure since then.
“With many families struggling to make ends meet, it is completely unfair that people are stuck in this situation. Telecom providers need to step up and play their part to support their customers through the cost-of-living crisis.
An Ofcom spokesman said: “While Ofcom does not set retail prices, companies must treat customers fairly – particularly during this extraordinary period of hardship for many households.
“Our rules are clear: everyone must be told in advance about any future price increases before they sign up, and we’re checking whether phone and broadband companies are keeping up.
“Customers can already opt out penalty-free if their provider hasn’t specified a price increase in their contract, or didn’t make this clear when signing up. If you don’t think your provider has followed the rules, So you should first complain to them and if necessary go to the independent ombudsman who can decide your case.
A spokeswoman for BT Consumer, which covers BT, EE and Plusnet, said: “With the announcement of the December 2022 CPI rate, we can confirm that our price change will go ahead on 31 March.
“We expect the average customer to see their price increase of around £1 per week. This price increase does not apply to all of our customers. Our BT Home Essentials, EE Mobile Basics, PayG, BT Basic, landline-only and Prices for Home Phone Saver’s more than three million customers will remain stable through 2023.
“Although telecoms bills are only a small fraction of the total average household spend, we know it all adds up. We take seriously our responsibility to ensure that our services are affordable through our market leading social charges Be accessible to a wider group of customers.
“Customers who are struggling financially and are eligible for Home Essentials can opt out penalty free at any point in their contract, this also includes EE and Plusnet customers.
“We are balancing our rising own costs due to high inflation and making critical digital infrastructure investments for the UK.”
(tags to translate) OFCOM