End of Contract Letters to Start for UK Mobile and Broadband ISPs

Starting tomorrow all fixed broadband, mobile, home phone and pay TV providers will be required to implement Ofcom’s end-of-contract notification system (sent by text, email or letter), which is designed to help tackle the so-called “loyalty penalty” by keeping customers informed about the best deals and encouraging switching.

At present it’s a fairly normal practice for the largest providers in any aggressively competitive market to entice new customers by offering big price discounts on your first minimum contract term (lasting up to 12-24 months), although the price you pay often jumps significantly once outside of that period (post-contract).

Unfortunately not all ISPs are clear enough about how much you’ll pay after your initial minimum term has ended, while some consumers (16%) aren’t even aware of when their broadband contract term is due to end (rising to 21% of over-55) or how much they’ll be paying once it does.

Likewise others may be fearful of switching complications, such as service downtime or the hassle of having to figure out who they should switch to. Around 30% of mobile and broadband customers are not confident in navigating the market and haven’t switched in at least two years, which rises to around 40% among over-55s.

All of this has given rise to the so-called “loyalty penalty“, which is a general reference to how subscribers who remain with their provider and don’t haggle for a better price – only 10% of consumers ever do this (see our Retentions Tips article) – will often end up paying more than new customers. In response Ofcom has spent the last 2 years encouraging greater fairness and pushing a new end-of contract notification system.

End of Contract Notifications

From tomorrow providers will be required to issue End of Contract Notifications to existing subscribers (usually between 10-40 days before the end of your contract). This letter, text or email will include the end date of your current minimum term, details on the existing package and what you’ll be paying if you stay etc.

Notification Details

* The contract end date;

* The price paid before this date;

* Any changes to the service and price paid at the end of this period;

* Information about any notice period required to terminate the contract; and

* The best deals offered by their provider, including telling loyal customers what prices are available to new customers. Ofcom requires that such deals should be available for at least 30 days from the date of notification in order to give consumers a chance to compare and consider.

Providers will also be required to send a notification to all existing customers whose initial contract term has ended (must be done “at least” annually). On a mobile plan this must also include at least one SIM-only deal for customers on bundled handset and airtime contracts.

Business customers will also receive the notifications and best tariff information annually in a form suitable for them. Ofcom said providers will all have to “tell customers about their best available deal, both when their deals are coming to an end, and every year after that if they don’t change their deal.”

Lindsey Fussell, Ofcom’s Consumer Group Director, said:

“Millions of people are out of contract right now and paying more than they need to. These new rules make it easier to grab a better deal.

But you don’t need to wait to hear from your provider. Just a few minutes of your time could save you hundreds of pounds today.”

Ofcom’s approach is clearly designed to encourage more switching and the providers will no doubt seek to control that outflow, which may hopefully result in such companies putting extra effort into offering better deals to existing subscribers. On the other hand if we do see better offers for existing customers then this may be balanced by less attractive promotions for new customers. Time will tell.

At the same time as all this the regulator has also been busy encouraging providers to put more effort into protecting vulnerable consumers. As part of that they last year introduced a new Fairness for Customers commitment and proposals for a Fairness Framework, which since then has seen ISPs pledge to give customers a “fair deal” and adopt a “fair approach to pricing” (i.e. prices must be both clear and easy to understand).

Under this approach Ofcom managed to pry a range of commitments from the market’s largest broadband providers (see below), which will help to protect consumers and more vulnerable groups (i.e. the ones most likely to suffer as they rarely ever shop around and switch). The regulator is also still exploring “the case for a new, special tariff to protect low-income households” (this would require new legislation).

Fairness Commitments by the Biggest UK ISPs

* BT, Sky Broadband and TalkTalk will allow their out-of-contract customers to get the same deals as new customers, when they take out a new contract (Sky has already implemented this commitment. BT will offer new customer prices to existing customers, albeit only for a limited time period when sending end-of-contract and best tariff notifications).

* The difference that any of Sky’s newly contracted customers will pay when their contract expires is no more than £5 per month. From February 2020, BT will cap the difference that existing in-contract customers pay when their contracts expire (they’ve yet to confirm the amount of this cap).

* BT customers without access to superfast broadband will no longer pay more than entry-level superfast customers (due to be introduced from mid-2020). And BT will provide a one-off automatic price reduction for vulnerable customers who are currently out of contract on more expensive deals.

* TalkTalk and Virgin Media will both carry out annual price reviews for their vulnerable customers to ensure they are on the best deal for their needs, providing automatic discounts where appropriate if customers do not respond.

* BT, EE, Plusnet and TalkTalk have all pledged to protect out-of-contract customers from above-inflation price rises.

Some of the above changes will be introduced alongside tomorrow’s new notification system and others will follow soon after. Despite all this we still see ISPs that fail to do basic things, such as making their post-contract prices clear (i.e. hidden away in the small print or they don’t tell you about it until AFTER the order process has started), and it remains to be seen if this will continue.

The new end-of-contract notifications also have a couple of caveats. Firstly, they can tell you what deals are available to new customers but the catch is that they don’t have to offer those to you (even though we suspect some will). Secondly, they don’t have to tell you about incentives or gifts, which means that new customers might be offered a £100 shopping voucher but the provider doesn’t have to mention that in its letter.

Example of a Text Message Notification

UPDATE 8:57am

We’ve had a comment in from the first ISP.

TalkTalk Chief Executive, Tristia Harrison, said:

“TalkTalk is committed to making the broadband industry a fairer place and continues to champion the move to full fibre enabling customers to benefit from faster, more reliable services.

We already notify our customers when their contract is coming to an end, so welcome Ofcom’s new requirement coming into force that makes it mandatory for all providers to do the same. We led the way on fairness by being the first to guarantee no mid-contract broadband price rises across all its plans in 2016. And we haven’t stopped there, from making it easier for new and existing customers to find the best deal through to capping out-of-contract prices, we’ll continue to strive for a telecoms industry that always puts the customer first.”

TalkTalk’s Fairness Commitments

TalkTalk will continue to never increase broadband prices mid-contract.

Will continue to notify customers when they come to the end of the contract so they can find the best new deal – and will now offer them better value or the same package available to new customers.

Will continue to provide customers with unlimited broadband so customers never find their data restricted at peak times.

Will continue its Great Connection Guarantee, that lets customers trial their fibre broadband for 30 days – if they’re not happy, they can leave penalty free.

>From March, out of contract Fibre and broadband customers won’t pay more than £30. [Changed below as TalkTalk’s PR firm got this wrong]

Faster Fibre and Broadband customers who don’t get around to switching onto a new deal won’t pay more than £30 a month from March. With standard out-of-contract pricing to be reviewed in-line with inflation from May 2021.

>From March, out of contract fibre customers won’t pay more than £5 more than their previous contract price. [Removed as TalkTalk’s PR firm got this wrong]