Ofcom wants ISPs to tell customers when their contract's up
Customers of landline, broadband, subscription television and mobile services would be told when they were approaching the end of their minimum contract period under new rules proposed on Tuesday by Ofcom.
The regulator said more than 20 million customers of those services were currently outside their minimum contract period, and more than 10 million were on deals with an automatic price increase at the end.
That meant millions of people could be paying more than they needed to, with Ofcom saying customers who bundled their landline and broadband services paid, on average, around 20% more when they go out of contract.
The plans were said to be part of Ofcom’s work to help people shop around and secure the best deal, whether by switching provider or getting a new deal with their existing one.
Currently, most providers did not remind customers when their minimum contract period was coming to an end, nor did they explain what would happen after the contract ends.
“There is so much choice out there for people, but we’re concerned many are paying more than they need to – particularly those who are out of contract,” said Ofcom’s consumer group director Lindsey Fussell.
“So, we’re looking at ways to make it as easy as possible for people to shop around for the best deal.
“Consumers have told us they want to be alerted that their contract’s coming to an end and get advice on what their options are, and we’re proposing that providers must do exactly that.”
Ofcom’s proposed new rules would mean providers would have to notify their customers when their contract was coming to an end.
The notification would tell them about any changes to their price or services, and let them know their options - including that they could be able to save money.
Providers would also be required to send a one-off ‘out-of-contract’ notification to all existing customers whose initial contract had ended, but who weren’t given that information at the time.
The regulator said the notification would be sent in line with how the customer had said they preferred to be contacted.
It was news welcomed by some in the industry, with Richard Neudegg, head of regulation at uSwitch, saying it came “not a moment too soon”, adding that uncertainty over contract dates was currently costing consumers £40 every second in overpayments.
But Neudegg had concerns about the time it might take for the rules to take effect, saying Ofcom would need to stick to its timetable.
“It is currently proposing to take ten weeks to consult before it goes through the process of making a final decision.
“Coupled with a likely implementation period of six months, we could be waiting at least a year before we see any changes - and all this time consumers in expired contracts will be continuing to throw their money down the drain.”
USwitch is a comparison service which derives its revenue from commissions, paid by utility retailers when a customers signs up to a new contract, so it has a vested interest in encouraging more consumers to shop around and switch providers.