New Ofcom rules mean phone, broadband and pay TV customers must be warned when their current contract is ending
Customers will be prompted to take action to avoid hefty price hikes for broadband and TV under new industry rules coming into effect on 15 February.
Ofcom says about 20 million telecoms customers are already out of contract – including 8.8 million broadband customers – and many are paying more than they need to.
The regulator says 25,000 broadband customers come to the end of their contract every day – and this usually leads to an automatic price rise.
Discounts on new contracts
Households can save money by taking advantage of the discounts available when they sign up for a new broadband, TV or phone deal.
However, when an initial contract ends the monthly price is usually hiked up substantially. But the problem is, many people don’t make a note of when their contract ends. According to Ofcom, 16% of broadband customers don’t know if they are in contract. This rises to 21% of over-55s.
End of contract notifications
The new Ofcom rules will help consumers see if they are on the best deal.
Telecoms companies will have to warn customers between 10 and 40 days before their contract comes to an end.
These alerts can be sent by text, email or letter, and must include:
- When your contract ends
- What you’ve been paying until now, and what you’ll pay when your contract ends
- Any notice period for leaving your provider
- Your provider’s best deals, including any prices only available to new customers
If your deal expired before 15 February, providers will have to send you an annual letter reminding you that you are out of contract, and the first letter has to be sent within a year of these guidelines coming into place.
How much could people save by taking out a new deal?
Last year, Ofcom found that out-of-contract broadband customers could save an average of £100 a year by agreeing a new deal with their existing provider. Some could save £150 or more, depending on their provider. This figure doesn’t include savings people could make on their TV package.
About three million out-of-contract broadband customers could actually upgrade to a higher-speed package with their provider and pay less than they do now.
Among mobile customers who buy a handset and airtime bundled together in a single contract, 1.4 million could save money by switching to a cheaper SIM-only deal at the end of their existing contract.
Last year, Ofcom found that these customers could save an average of £75 a year, but some could save as much as £150.
What do the experts say?
Richard Neudegg, head of regulation at Uswitch.com, says: “For years, providers have profited from not always being entirely transparent about the status of their contracts.
“The introduction of end-of-contract notifications and annual out-of-contract reminders should finally put an end to this murky practice and help consumers know the best time to consider their options.
“Our figures suggest mobile and broadband consumers could be £1 billion a year better off if they take the opportunity to move to a better value deal.
Ofcom put extra protections in place for broadband customers last year – meaning you can walk away from your contract without being penalised if speeds drop below the level you were promised.
Ed Dodman, director of regulatory affairs at Ombudsman Services, says: “Accurate speed estimates are essential for consumers to be able to make informed decisions when purchasing broadband.
“Consumers are increasingly savvy when it comes to shopping around and personalised estimates will see consumers securing better deals and having greater confidence in their purchases.