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Ofcom Offers Guidelines on Hidden ISP Charges

Posted: 19th Dec, 2008 By: MarkJ
Ofcom has today published new guidelines on the extra charges levied by broadband ISPs and communications providers. These are often hidden away deep within the small print, causing many consumers to be unaware of their existence:

Ofcom Chief Executive, Ed Richards said: “When consumers shop around for the best deal, they should be able to easily assess the true cost of what’s on offer. We want to make sure that telecoms and pay-TV companies are up front about all their charges and, where there are small print charges, they must be fair.”

The regulator warns ISPs that they must meet their obligations under the Unfair Terms in Consumer Contract Regulations 1999 act. This requires providers to be clear and up front with their customers, make it easy for consumers to understand the charges, make sure any extra charges that are not part of the service price are fair.

These charges most typically surface when paying by cash or cheque (rather than by direct debit), receiving an itemised or paper bill, paying late (or not at all); or leaving a provider before your contract has ended:


But, if a provider does not make these charges prominent and transparent enough, and they are separate, additional charges, the charges should reflect direct costs only. And some extra charges, like late payment charges, should always reflect only the supplier’s direct costs. Others, such as charges for ending contracts early, should also be limited to fair levels.

For example:

  • Non-direct debit charges should be clear and limited to the cost of dealing with the payment (where these aren’t part of the price for the services being bought);

  • Charges for itemised billing should not usually be more than £1.50 per bill;

  • Charges for late payments should reflect only direct costs like the identifiable extra cost of collecting the money;

  • Consumers who end contracts early should never have to pay more than the payments left under the contract - in fact they should often pay less, to reflect the costs providers save because the contract ends early.

  • The guidance also gives Ofcom’s view about fixed-term contracts that renew automatically. Ofcom believes that they are likely to be unfair if they do not give consumers something of benefit in return for the renewal and a fair chance to opt-out.

Telecoms and pay-TV companies now have until the beginning of April to make any necessary changes to their terms and conditions. After that, Ofcom will consider the best way to make sure they comply with the law.
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