Ofcom confirmed it will ban mobile phone carriers and broadband providers from linking prices to high inflation figures in the middle of customer contracts on Friday.
The new rules from the UK’s broadcast, telecommunications, and postal service’s regulator, will now compel providers to be upfront by telling customers in pounds and pence about any price rises included in their contract.
They will take effect on Jan. 17, 2025, confirming rules that the regulator said it was looking at in December last year.
Many major phone, broadband and pay TV companies now link their price rises to future inflation rates. That “unfairly” puts the burden of shouldering inflation costs onto customers, Ofcom said.
It said that people “cannot predict” inflation and “do not understand [it] well“ adding that it had ”decided to ban this practice.”
The regulator said: “More than half of broadband customers (55%) and pay monthly mobile customers (58%) do not know what inflation rates such as CPI [consumer price index] and RPI [retail price index] measure.
“And of those who are with providers that use inflation-linked price rises, very few broadband customers (16%) or mobile customers (12%) were both aware of the price rise and able to identify that it was inflation-linked with an additional percentage.
“We also found that, even when people do consider future inflation-linked price rises when choosing a contract, they often do not understand them fully and find it difficult to estimate what the impact could be on their payments.”
Cristina Luna-Esteban, Ofcom telecoms policy director 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.
“We’re stepping in on behalf of phone, broadband, and pay TV customers to stamp out this practice, so people can be certain of the price they will pay, compare deals more easily, and take advantage of the competitive market we have in the UK.”
The regulator ruled that since Radio 2 targets older listeners, it could have a significant effect on independent radio stations, such as Boom Radio, which targets the same 55 years and above demographic.
