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Ofcom Force End of Contract Notices for UK Broadband and Mobile

Wednesday, May 15th, 2019 (7:21 am) - Score 2,324
contract notification letter example

Ofcom has today set out the final details of their new end-of-contract notification system (sent by text, email or letter) for UK customers of broadband ISPs, Pay TV, landline phone and mobile operators, which is designed to help tackle the so-called “loyalty penalty” and will keep consumers informed about the best available deals.

At present it’s a fairly common practice for major telecoms providers to try and attract new customers by offering big price discounts on your first minimum contract term (lasting up to 12-24 months), which occurs across nearly all service sectors and is by no means unique to broadband etc.

Discounts (special offers) like this are generally considered normal for any aggressively competitive service market, although not all ISPs are clear enough about how much you’ll pay post-contract (i.e. after your initial minimum term has ended). In particular a fair few consumers aren’t aware of when their contract term is due to end (12%) or how much they’ll be paying once it does. Likewise others may be fearful of switching complications, such as service downtime.

All of this has given rise to the so-called “loyalty penalty” term, which is a general reference to how consumers who remain with their provider and don’t haggle for a better price (i.e. after their minimum contract term has ended) will often end up paying more than new customers (i.e. only new customers usually benefit from the biggest discounts).

NOTE: Ofcom says people who bundle their phone and broadband services together pay, on average, around 20% more when they are ‘out of contract‘ (rising to 26% among those who bundle pay-TV with these).

At the end of 2018 the Competition and Markets Authority (CMA) called for “urgent action” to help tackle related issues and protect vulnerable consumers (here). One part of Ofcom’s answer to that has been to develop a new contract notification system, which all providers will be expected to adopt.

End of Contract Notifications

Under the new system 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 or email will include the end date of your current minimum term, details on the current 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.

Providers will also be required to send a notification to all existing customers whose initial contract term has ended (sent “at least” annually). As above this notification would contain details of any changes to their price or services and let them know their options (upgrades, deals etc.). On a mobile plan this must include at least one SIM-only deal for customers on bundled handset and airtime contracts.

Business customers will also receive ‘end-of-contract’ 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.”

NOTE: The rule will NOT apply to shorter monthly (30 day rolling) contracts as the admin burden would be too excessive, but such providers will still have to send an annual one (provided the customer has been with them for 1 year+).

Example Letter (Article Continues Below)

contract notification letter example

Ofcom has now given providers 9 months to introduce the system (originally they proposed a six month implementation), which means that it will go live from 15th February 2020. The full statement is here.

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

“We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it.

This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.”

At this point we think it’s necessary to highlight that not all ISPs adopt the same model and many smaller providers, which may also offer advanced features (static IP etc.) and better service quality, simply charge a set monthly fee that rarely ever changes.

A few providers, such as TalkTalk, also offer an alternative approach by enabling existing customers to re-contract on to a lower price point than their standard rate when a contract ends. Alternatively it’s possible that a bit of haggling could save you a lot of money (see our Retentions Tips article) but only about 10% of consumers seem to ever do this (if you’re happy with the service then at least try giving negotiation a try first).

On the one hand it’s possible that we could now see more ISPs putting extra effort into offering better deals to existing subscribers. Ofcom’s approach is designed to encourage switching and the providers will no doubt seek to control that outflow. 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.

UPDATE 7:57am

The first comment has come in.

A TalkTalk spokesperson said:

“Today’s announcement is an overdue first step towards a fairer market, but consumers will be dismayed that Ofcom has bowed to industry lobbying and is now going to make customers wait longer than necessary to benefit from this change.

While most of our rivals have continued to increase the premium loyal customers pay, TalkTalk has already taken a stand against unfair pricing. Two years ago, we restructured our business to reward loyal customers. We have closed the gap between what new and existing pay and we already contact those approaching the end of their contract, encouraging them to re-sign to better deals.”

UPDATE 8:16am

The Government has also given its reply.

Margot James, UK Minister for Digital, said:

“Ofcom’s new rules will make sure consumers know when their contract ends, and help them save money by switching to a better deal. For too long, large numbers of loyal consumers have been paying too much for their telecoms services, which is why we’ve also strengthened Ofcom’s powers to create a fairer and more transparent system.”

We’ve also included an example text message picture below from Ofcom’s new system.

end_of_contract_text_notice

UPDATE 11:47

Mobile operator O2 has responded too.

An O2 Spokesperson said:

“As a customer-led organisation, O2 agrees that customers should be equipped with the right information to help them make purchasing decisions. With O2 Refresh, which separates airtime and device costs, we go further – we do not just notify customers when they have paid off their device but we immediately and automatically reduce their bills. O2 has been doing this since 2013. Citizens Advice found that customers of other networks pay £490m to contracts that would have been automatically reduced if they were with O2.”

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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11 Responses
  1. Avatar walkerx

    I think this a move in the right direction, but the customer should be contacted a bit earlier than that as you have to give 30 days notice to end the contract or be billed further.

    The letters will be dated 10-14 days prior but may not actually go out then, also they are always sent 2nd class and can take upto a week or more to be delivered, this means consumers will end up having to pay more.

    They also should ensure that customers receive the vat rebate (for the service not device) on their charges if they leave contract early and that it is the correct rating of current vat rate.

  2. Avatar chris conder

    this is good information. Also everyone should be reminded to get their own email addresses independent of the ISP then they can change suppliers much easier… there are ‘free’ emails like hotmail and gmail, and also paid for domain name emails. Being tied to a certain provider because you have fallen for their own ‘free’ emails is another way of stopping you escaping.

    • Avatar Richie Brian

      Yep! I got my first email address in the 90s, when I was a kid. It was linked to my parent’s ISP email, and they could read everything, so I got a Hotmail account instead. I still have it (I now use an outlook.com account, but it’s the same one, and emails sent to my Hotmail address still arrive), and it’s moved with me through 5 house moves, and a dozen or more ISPs.

      My parents used that ISP email address for years, even paying a fee to keep accessing it when the ISP stopped offering it! I persuaded them to change, but it was hard work.

  3. Avatar tumbleweed

    Just had BT on the phone to me trying to offer me a ‘deal’ as my contract expired. Laughed obviously as can get the same elsewhere for between a 1/3 and 1/2 the cost which i intend to do this summer.

    • Avatar Mike

      Go with Sky or NowTV then you can switch between the two every 18/12 months and keep the new customer offers.

      The only difference between the two routers is cosmetic so it makes change over of minimal fuss.

    • Avatar Dave

      You have to haggle right! 😉

      I’ve got BT Business Broadband with static IP and 4G Assure (4G failover) for £27.50 per month.

    • Avatar dave

      I should have said that that is Infinity 2/76Mbps.

    • Avatar Mike

      Yeh but it’s BT… no deal is better than BT deal 😉

    • Avatar whybother

      “You have to haggle right!”

      If it were me id rather save the precious oxygen and not bother haggling with them and just get cheaper elsewhere.

  4. Avatar Mike

    Only issue I see with this is how much of an ISPs margin was based on customers not noticing the price increase after the contract period ended, might lead to price increases.

  5. Avatar Mel

    It’s really annoying that some ISPs don’t notify that you’re discount is ending, although I can well understand them not doing so. I’m sure Mike’s right that prices will increase though.

    I got caught out last month, got the end date wrong, and then waylaid by family issues. My bill went up from £20 to £45 for a month before choosing and switching to another ISP.

    I’m surprised the EU hasn’t taken some action over all the ISP locked routers that get sent out, that are really only fit for landfill once their customers leave.

    Encouraged to swap ISP every year to get the promotional discounts, I’ve got loads, some never used. A few can be hacked or flashed with alternate firmware, but only one or two were worth the bother.

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