Broadband, TV and phone providers must tell customers when they are near the end of their minimum contract period under proposed rules to encourage shopping around for the best deals.
Ofcom said more than 20 million customers were outside their minimum contract period and could be paying more than they needed to, and more than 10 million were on deals with an automatic price increase at the end.
Under the proposal, providers must notify customers who are coming to the end of their contract about any changes to their price or services and about their options, including that they could save money.
End of contract notifications: phone, broadband and TV customers must be notified when they approach the end of their minimum contract period, under new rules proposed today by Ofcom: https://t.co/nS8kgJAkfw pic.twitter.com/0D4hJaDHl7
— Ofcom (@Ofcom) July 31, 2018
Providers would also have to send a one-off “out-of-contract” notification to customers whose initial contract has ended and who were not given this information at the time.
Ofcom said the alerts could be by text message, email or paper letter depending on the customer’s preference.
Currently, most providers do not remind their customers when their minimum contract period is coming to an end or explain what will happen after the contract ends.
Customers who do nothing when their minimum contract period ends are likely to continue on a monthly rolling deal and can face price increases or changes to their original deal.
Ofcom said research had found many customers were unsure if they were still in their minimum contract period or when their contract ended.
Ofcom’s consumer group director, Lindsey Fussell, said: “We’re concerned many people are paying more than they need to – particularly those who are out of contract.
“Customers have told us they want to be alerted when their phone, TV or broadband contract is coming to an end, and get advice on their options. Under our plans, providers would have to do exactly that.”
Under the proposals, notifications should be sent to all residential and small business customers who use services including landline, broadband, pay-TV and mobile between 40 and 70 days before their contract ends.
Citizens Advice chief executive Gillian Guy said: “Consumers who stick with their broadband or mobile services end up paying more, so end-of-contract notifications are a step in the right direction. Our research shows broadband consumers pay an average £113 loyalty penalty per year if they do not switch.
“For mobiles, these proposals don’t go far enough. Over a million people are still being charged for a mobile handset they have already paid off – an extra £22 a month on average. This unacceptable practice needs to stop.”
Digital Minister Margot James said: “Customers should not be charged a premium for their loyalty. We’ve strengthened Ofcom’s powers to better protect consumers and moves like this will help the public make informed choices about the best deals available to them.”
