Ofcom UK Finds Fault with Virgin Media Contract Termination Charges

An investigation conducted by market regulator Ofcom claims to have found “reasonable grounds for believing” that cable broadband ISP and TV operator Virgin Media may have broken its consumer protection rules by failing to play fair with their Early Termination Charges (ETC).

Most of the UK market’s largest broadband and phone providers will usually levy some form of Early Termination Charge (ETC), which applies to customers that choose to exit their contract before the current term has come to an end (Virgin calls these Early Disconnection Fees).

For example, this is how much Virgin Media charges (maximum) per month if you leave their broadband service before your contract is up (applies to the remaining months). Further details, including information on legacy packages, can be found here.

Virgin’s Early Disconnection Fees (Broadband)

However, last year a series of complaints from consumers prompted Ofcom to probe Virgin’s handling of ETCs (here and here) and to check whether or not they were being compliant with the related General Condition 9.3 rule. On top of that they also checked if the operator’s approach was “unfair” under Section 62(1) of the Consumer Rights Act 2015 (CRA).

The GC9.3 rule is designed to “ensure that the conditions which apply if you terminate your contract don’t disincentivise you from changing to a new provider, e.g. through excessive early termination charges.” Meanwhile Section 62(1) of the CRA states that an unfair term of a consumer contract is not binding on the consumer (this means provisions within the contract itself).

Today the regulator has published their preliminary findings and concluded that Virgin may have breached their rules in several different areas.

Ofcom Statement

Ofcom has reasonable grounds to believe that Virgin contravened GC 9.3 by:

(i) setting and charging customers early termination charges (ETCs) which were too high;

(ii) requiring customers moving house to an area within Virgin’s network to sign up to a new fixed term contract or pay ETCs; and

(iii) failing to take action to ensure that its conditions and procedures for contract termination did not act as disincentives to its customers against changing provider.

Having reviewed the evidence gathered in the investigation, we also have reasonable grounds for believing Virgin also contravened GC 9.2(j) when it failed to publish on its website clear and up-to-date information about the ETCs payable when fixed term contracts are terminated.

Some consumers had also previously complained that it was unfair to charge them ETCs if they had Virgin Media and wished to retain the service but were moving to a new house that existed outside of the operator’s network area. Unfortunately Ofcom has today decided that this specific complaint “does not fall within the scope of GC 9.3,” although they are “continuing to consider whether these terms raise concerns … and we will provide an update in due course.”

A Virgin Media spokesperson said:

“We have received Ofcom’s provisional findings and we will now review them thoroughly.

We make it clear to customers that early disconnection fees can apply and we also offer 30 day rolling contracts for those that do not want to sign up for a minimum period, such as 12 months, and need more flexibility.”

The regulator has now given Virgin Media some time to respond and they expect to publish their final decision on this case by the end of summer 2018, which could potentially include a significant financial penalty.