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The new rule will come into force on 15 December
The Advertising Standards Authority (ASA) is set to begin actioning new, stricter guidance on mid-contract price rises for telcos, following a six-month grace period that began in June.
The new rules apply more stringent standards on how operators must advertise information about future price rises.
The main premise of the new rules is for operators “not give the impression that prices are fixed if they are not”.
Operators must ensure that such information is prominently displayed and clear for the consumer. Currently, operators typically advertise contracts simply as ‘£30 per month for 18 months’, with little mention as to whether this price can be increased before this minimum term.
Statements clarifying this situation are often included in the small print, with the ASA noting that some of these statements are likely to “contradict rather than clarify” the matter at hand.
Additionally, the ASA notes that broadband and mobile contracts offered to consumers that have implied price rises must be made clear, with indications of the specific change in price. Broadband and mobile providers typically raise their prices each year by up to 4%, plus an inflation-based metric such as CPI (Consumer Price Index) or RPI (Retail Price Index). CPI and RPI are often misunderstood by customers, with the clarification statements again misleadingly placed in the small print of contracts.
As consumers are often unaware of the price rises, they are then hit with a second financial penalty if they attempt to leave the contract early.
In February, Ofcom launched an investigation into the clarity of mid-contract price rises, finding over a third of customers were unclear on the stance of their provider. Ofcom is the co-regulatory partner for broadcast advertisements and regulates communications in the UK. Ofcom acts as the legal partner for such advertisements – if there is a failing of a company to stick to ASA guidance, they are referred to Ofcom to take legal action.
The new guidance can be downloaded in full here.
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