Small businesses and consumers will be able to terminate mobile, broadband and landline contracts if suppliers raise prices mid-contract, Ofcom has ruled.
Previously, customers were unable to leave contracts with firms even if the price was raised from the original cost when the package was bought. However, Ofcom has now ruled that no penalties should be incurred if the price is raised unexpectedly mid-contract.
Now, firms must give customers at least one month’s notice of the price raise during which time they can leave the contract. The new terms come into effect from Thursday.
Ofcom’s consumer group director Claudio Pollack said the decision was an important step forward to improve the subscription market to give more power to buyers.
“We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases,” he said.
“Additionally, our new guide highlights important factors customers might want to consider before entering into a new contract to help them understand exactly what they are signing up to.”
Ofcom said it would carry out mystery shopper research in the coming months to ensure internet providers adhered to this new code of conduct.
Ofcom also confirmed to V3 that the rulings are not retrospective, so users who experienced price hikes before Thursday will not be able to end their contracts.
BT, the largest broadband services provider in the UK, said it welcomed the changes, although it said the same priniciples should apply to other subscription services, such as rival Sky TV services.
“We support Ofcom’s principles of allowing a customer to leave a landline, broadband or mobile contract without penalty and regard this change as an endorsement of BT Consumer’s approach in stark contrast to that of its competitors," the firm said.
"However we are disappointed that they [Ofcom] did not take this opportunity to apply the same principles to pay TV services, which leaves Sky customers unprotected against hefty year-on-year increases.”
The decision comes in the same week that Ofcom gave permissions for vehicles to install satellite broadband infrastructure to bring better broadband to ships, planes and trains.
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