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Wednesday, December 13, 2023

Ofcom says mobile contracts should ditch inflation-related price rises

UK telecoms regulator Ofcom wants to ban inflation-related rises in telecoms contracts. Instead, it says any potential mid-contract price rises should be set out in pounds and pence.

Many phone, broadband and pay TV companies currently increase their customers’ tariffs in line with a percentage formula linked to inflation. For example, a company might tell customers it will increase their monthly bill every April by the Retail Price Index.

However, as the rate of inflation and the RPI will vary from year to year, Ofcom says customers are required to commit to a contract without being certain about the prices they will pay.

As a result, Ofcom wants potential price rises during a contract to be defined in terms of specific amounts rather than percentages.

Its proposed new rule would require any prices and price rises in a customer’s contract to be set out in pounds and pence, prominently and transparently, at the point of sale. This would prevent providers from including inflation-linked or percentage-based price rise terms in new contracts.

Ofcom’s consultation is open until 13th February 2024, with a final decision expected in spring 2024.
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