Ofcom cracks down on inflation-linked price hikes
Telecoms providers must set out upfront price rises that will apply to customer contracts to protect consumers from uncertain and volatile inflation.
From today, Ofcom will require any price rises linked to future inflation to be clearly written into a customer’s contract at the point of sale.
Many leading phone, TV and broadband firms already include terms on inflation-linked price rises, but the actual cost to consumers has remained obscure. Customers are left to estimate what they will have to pay in upcoming bills due to volatile inflation rates.
Indeed, the communications regulator found that 55 per cent of its 11 million broadband customers and 58 per cent of monthly mobile customers were unaware of how inflation rates altered their costs.
The research found that even when people did consider inflationary price rises, they didn’t understand them fully, making it difficult for them to estimate their payments.
From now on, however, providers will have to set out any future price rises in “pounds and pence”.
Ofcom’s group director for networks and communications, Natalie Black CBE, said: “More than ever, households want and need to plan their budgets.”
“Our new rules mean there will be no nasty surprises, and customers will know how much they will be paying and when, through clear labelling.”
When the policy was announced last July, Ofcom’s telecoms policy director Cristina Luna-Esteban said: “With household budgets squeezed, people need to have certainty about their monthly outgoings.”
“But that’s impossible if you’re tied into a contract where the price could change based on something as hard to predict as future inflation.”
Virgin Media told CityAM, ““New and re-contracting Virgin Media customers will receive a flat increase of £3.50 a month, effective each April, while airtime price increases for O2 customers will be £1.80 a month, with device payment amounts remaining frozen.”
“This will give customers more certainty about how their bills may change over the course of their contracts. At less than the cost of a takeaway coffee or a sandwich, this represents excellent value for connectivity that our customers are using more than ever before, at the same time as we invest more than £5 million a day in our networks and services to give our customers the fast and reliable connectivity they increasingly rely on.”