Ofcom "exit without penalty" policy could protect from mid-term phone contract price hikes

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contract-cuff.jpgOfcom are exploring ways to protect consumers from mid-contract phone and broadband price hikes.

Currently, networks and ISPs can raise the price of phone and broadband contracts in line with inflation, with small print meaning customers can’t argue against the rise, nor leave the contracts without incurring a penalty even if they signed up at a cheaper rate.

Just last month O2 announced that their prices would be going up by more than 3% for 2013, alongside many other phone contract providers announcing similar plans.

The telecoms watchdog is now looking into implementing an “exit without penalty” rule, meaning that customers could quit a contract without facing a monetary charge if the cost of their contract rises before their initial contract has run its course.

According to Ofcom: “This proposed change would address consumer concerns that it is unfair that providers are currently able to raise prices, while they themselves have little choice but to accept the increase or pay a penalty to exit the contract.”

Ofcom will also be encouraging providers to be more transparent with their pricing structures and potential rises. The watchdog is also looking into whether or not it’ll be sufficient for providers to make clear well in advance to consumers of forthcoming price rises, offering an “opt in” option for variable price contracts.

The consultation comes in the wake of 1,644 complaints from consumers who have found themselves on the wrong end of unexpected contract price hikes.

Gerald Lynch