New Which? research has found two-thirds of current broadband deals see customers hit with substantial price hikes when their contract ends, as new rules requiring operators to tell people when their deal runs out come into force today.
The consumer watchdog analysed current deals with the major providers and found more than two-thirds (68%) had a price increase after the end of the minimum contract period – with some going up by as much as 89 per cent.
Millions of consumers are at risk of being hit by these price increases – as Which? found six in 10 (58%) broadband customers have been with their current provider for two years or more.
As broadband contracts are only up to 24 months long, anyone still with their provider after this period who has not asked for a better deal could be paying an average of £120 more a year, according to Which? research.
Until now, there has been no requirement for providers to remind customers that they are reaching the end of their contract – and no warning that their bills may go up as a result. Instead, it has been up to consumers to know when their contract is up and to take the initiative to either take up a new contract with their current provider or take their business elsewhere.
However, as of today, broadband, pay-TV, mobile phone and landline providers must tell customers when their contracts are about to end and inform them about their best alternative deals.
All operators will also need to share information about the best deals they offer to new customers – typically the cheapest on the market – however not all providers have committed to making these tariffs available to longstanding customers.
Those with contracts ending soon should get an ‘end of contract notification’ as of today, while operators will have a few months to stagger notifications to those customers who are already out of contract. This group should still contact their provider to push for a better deal as they could be overpaying in the meantime.
End-of-contract notifications are the latest in a series of initiatives, which Ofcom says are aimed at making the telecoms market fairer for consumers.
Other measures include automatic compensation for problems such as service dropouts and a broadband code of practice, which seeks to improve transparency around broadband deals at the time of purchase.
While end-of-contract notifications will help customers know that they are moving onto a rolling contract and their monthly tariff may change, it is important to note that customers will still need to take action – either by contacting their provider to take up the new deals offered by their current provider or switching away. If they do nothing they could still end up paying too much.
Which? believes that Ofcom will need to monitor and review the progress of this initiative to ensure it is truly working for consumers.
If it is not having the effect of encouraging consumers to review their broadband contract and ensure that longstanding customers are not paying too much, the regulator will need to take further action to make sure all customers are being treated fairly when it comes to this essential service.
Says Natalie Hitchins, Which? Head of Home Products and Services, said:
“Our research shows that far too many people are paying more than they need to for broadband, so this rule change to ensure people are notified before their contract ends – and potentially before their bills go up – is a positive step.
“Anyone who thinks they are out of contract, paying too much or not happy with their current service should not wait until they receive a notification, you might find you save yourself hundreds of pounds a year if you haggle or switch.”