Ofcom to Protect UK Consumers from Unexpected Broadband ISP Price Rises

The UK communications regulator, Ofcom, has today launched a new consultation that seeks to address the problem of unexpected mid-contract price rises, which can lead to broadband, phone and mobile customers paying significantly more than they originally signed up for.

At present Ofcom’s General Condition 9.6 (GC9.6) rule requires providers to give customers a minimum of 1 month’s notice concerning any change to their contractual terms which is “likely to be of material detriment“. In addition customers whom receive such a notice are allowed to leave a contract penalty-free.

Sadly the regulators analysis of 1,644 consumer complaints (made between September 2011 to May 2012) revealed that many consumers were not made aware of the potential for price rises, such as when the cost of line rental increases (e.g. BT’s standard phone charges have a history of rising well above the normal level of inflation and other ISPs tend to mirror this).

Claudio Pollack, Ofcoms Consumer Group Director, said:

“Ofcom understands the frustration that consumers feel when faced with price rises in what they assume to be a fixed contract with a fixed price. Having considered the large number of consumer complaints, we will soon consult on ways to address consumer concerns and ensure they are being treated fairly in this area.”

According to the regulator, many consumers felt that providers should respect the price originally agreed during the life of a contract, while others raised concerns about the amount of the price increase itself.

The regulator hints that it will investigate all of these concerns and plans to propose several adjustments to its rules by the end of 2012, such as a requirement for greater transparency of price variation terms. It remains to be seen whether this will be enough to prevent the problem or if it might simply result in consumers paying more than they do already from the outset.