Telecoms regulator Ofcom is capping the cost of calling directory enquiry services to protect consumers from high prices.
The watchdog says it is concerned about the cost of directory enquiry prices rising steeply, with some providers charging almost £20 for an average 90-second call.
For example, the price charged by the most popular service, 118 118, for a 90-second call is now £11.23.
Moneywise warned consumers about the hidden costs of 118 calls earlier this year, particularly the four million people aged 65-plus who have never used the internet.
The regulator says that from 1 April it will cap the maximum amount a 118 service can charge at £3.65 per 90 seconds, bringing prices back to 2012 levels.
Jane Rumble, Ofcom’s director of consumer policy, says: “Directory enquiry prices have risen in recent years, and callers are paying much more than they expect. Our evidence shows this is hurting people, with some struggling to pay their bills.
“We’re taking action to protect callers by capping 118 prices. This will significantly cut the cost of many calls and bring them back to 2012 levels.”
Ofcom’s research shows that consumers tend to call the numbers they most easily remember even though there are cheaper services available.
It says around 450,000 consumers a year are paying £2.4 million in total more than they expect directory enquiry calls, with some struggling to pay their bills.
The regulator points out that while the number of calls being made to directory enquiries has been falling by around 40% a year, more than a million people in the UK – many of them elderly – still use them.
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Richard Neudegg, head of regulation at uSwitch.com, says the cap will help protect the elderly and more vulnerable customers.
He says: "118 operators have been losing customers since their heyday as use of the internet for everyday enquiries has become the norm, and the reaction of some 118 services has been to increase charges for their limited customer base.”
He adds: "This is a clear signal that there is a limit on how much providers can recoup operating fees by hiking costs to a dwindling number of users, who often are unaware of the charges."
According to Ofcom, 65% of 118 callers don’t know how much calls cost, while 42% say they have no alternative than to use a directory enquiry service at that time.
The regulator says the new price cap will protect consumers from unexpectedly high bills and make directory enquiry services more affordable.
There are nine directory enquiry services that have a 118 number with published service charges of £15.98 for the first minute of the call and £7.99 for each subsequent minute.
The 118 services were introduced by Oftel, the previous telecoms regulator, in 2003.
The directory enquiry market was opened up to competition and a wide range of competing 118 services were launched.