Mobile and broadband users allowed to quit contracts
From today, consumers and small businesses will be able to exit their landline, broadband or mobile phone contracts without penalty if their provider raises the price mid-contract.
It means that if a provider decides to hike the monthly subscription price of, say, someone's mobile phone contract, that customer will be able to give one month's notice and exit the contract without penalty.
Communications regulator Ofcom also said that any changes to contract terms (pricing or otherwise) must be communicated "clearly and transparently" to customers.
The new rules are a victory for consumer rights groups, which have long maintained that it is unfair for providers to raise the price of a contract that consumers are then unable to get out of.
However, the new rules will not apply to people on existing contracts - only those taking out contracts from today will benefit.
Which? executive director Richard Lloyd, said: "This is good news for mobile phone customers, and the 60,000 people who supported our campaign against unfair price rises in fixed contracts. People can now be confident that the price really will be fixed when they sign a mobile contract, or they can walk away without a steep penalty if faced with a hike.
"We'll be keeping a close eye on the mobile phone industry to make sure it follows this guidance and gives customers clear information about contracts at the point of sale."
The new rules follow a consultation launched by Ofcom in early-January 2013, after the regulator stated that mid-contract price rises could potentially "harm" consumers.
Mobile phone network providers did not seem to pay any attention to the consultation – in April 2013, around 5.5 million Orange and T-Mobile customers on pay monthly deals were hit with a price increase, as a result of "rising business costs" according to parent company Everything Everywhere.
At the time EE dismissed criticism, saying: "The terms and conditions state that prices can be increased mid-contract, by the same [rate] as the Retail Prices Index. Customers are encouraged to read the terms and conditions and have a 14-day period in which to change their minds. If customers are unhappy they can break their contract if they pay a fee for leaving us early."
Under the new Ofcom rules, EE would not have been allowed to charge customers to exit their contracts.
Dominic Baliszewski, telecoms expert at broadbandchoices.co.uk, said: "Protection for consumers from mid-contract price rises is long overdue and provides clarity and consistency for customers in a situation which has to date been extremely opaque. Price rises may be a unavoidable fact of life, but when a customer gives up their freedom to switch by signing up to a contract at a set monthly price, that is the price they should continue to pay until the end of the contract term.
"Significantly, Ofcom has also specified that any provider who chooses to make reductions in the call, text or data allowance (in order to avoid increasing prices outright) will also be obliged to allow their customers to switch. This should avoid any sneaky tactics being used to instead reduce costs rather than increase revenues."