Mobile, broadband, and pay TV companies will no longer be allowed to give surprise mid-contract price rises as a regulator ban comes into effect.
Any price rises written into a customer’s contract now need to be set out “prominently and transparently” at the point of sale in pounds and pence to prevent the “nasty surprises” of inflation-based hikes.
This means consumers will be able to choose a contract featuring information in pounds and pence ahead of annual price rises in April.
Last April many deals rose by 7.7 per cent, in line with the Consumer Price Index announced in February as 4 per cent plus an additional 3.9 per cent.
Other deals rose by up to 8.8 per cent in line with the Retail Price Index, which was 4.9 per cent, plus 3.9 per cent.
Ofcom said: “As we have seen in recent years, inflation can be incredibly volatile and is difficult to predict.
“Our rules will protect consumers from bearing that risk, and ensure providers are clear about prices customers are obliged to pay over the whole contract period.”
However, while the new rules ban inflation-linked price rises, they still allow for annual mid-contract increases by a fixed amount but providers must be clear about when any changes to prices will occur.
Natalie Black, Ofcom’s group director for networks and communications, 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.”
Several providers offer contracts that do not contain price rises, while others offer deals that allow for unspecified price rises during the contract period.
If they do this, they must give customers 30 days’ notice and the right to exit penalty-free, so consumers can avoid the increase.
Uswitch telecoms spokesman Ernest Doku described Ofcom’s new rules as a “transparency tax for consumers”.
He said: “Many providers have now opted for a blanket flat-rate annual price rise that will be even higher than the inflation-linked approach for the average broadband customer.
“So if you’re on a cheaper or average-priced contract, the luxury of knowing what your exact price rise is in advance comes at the cost of an even steeper bill hike – effectively a ‘transparency tax’ for consumers.”
