Ofcom Set to Protect UK Consumers from Unexpected ISP Price Hikes

The UK communications regulator has today proposed new options that would allow consumers to exit their existing broadband or phone contract, without penalty, if their ISP introduces “any” price increase during the contract term. Sadly a complete ban on mid-contract price hikes has been ruled out as it wouldn’t be “consistent” with EU law.

The regulator will also move to ensure that ISPs are “transparent about the potential for price increases” and the consumers right to cancel, which is an area that some providers have exploited by deliberately making such information hard to find or difficult to read (small print).

Ofcom’s existing General Condition 9.6 (GC9.6) rule already requires ISPs to give customers a minimum of 1 month’s notice concerning changes to their contractual terms, although the current rules include an exception for where a provider agrees that the price increase “would be likely to cause material detriment“.

Claudio Pollack, Ofcoms 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.”

It’s expected that Ofcom will develop new guidance to help ISPs interpret and apply its revamped rules and the regulator is also considering whether or not “consumers should have to actively ‘opt-in’ to any variable price contract“. However the regulator also cautioned that such options are “unlikely to be sufficient to address the consumer harm identified“.

It should be said that some operators, such as Vodafone, have warned that Ofcom’s move may actually result in ISPs and mobile providers charging more for their services at the outset. Vodafone in particular contests that it should not be held responsible for passing on price increases that have been set by its suppliers (e.g. BT) or to help fund new government required systems (i.e. unavoidable increases).

A second consultation has now been launched to gain feedback on today’s proposals, which will close on 14th March 2013. A final decision is then expected to be published during June 2013.

Ofcoms Mid-Contract Price Rise Consultation
http://stakeholders.ofcom.org.uk/consultations/price-rises-fixed-contracts/