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Uswitch and Which? have both called on UK regulator Ofcom to end mid-contract price rises, with reports showing 85% of customers consider them ‘unfair’
In a survey of 2,000 broadband ISP and mobile customers commissioned by Uswitch, 85% of customers were found to view annual price rises as “unfair”, while 87% believe they should be allowed to leave their provider without penalty if prices are raised mid-contract.
Broadband and mobile providers typically raise their prices each year nu up to 4%, plus an inflation-based metric such as CPI (Consumer Price Index) or RPI (Retail Price Index). These increases are often buried in the terms and conditions of the contracts, leaving customers broadly unaware of just how much their prices may increase. To make matters worse, operators typically apply penalty fees to customers attempting to end their contracts early, hence making it difficult for them to switch providers if their monthly bills increase unexpectedly.
The survey found that a large part of the challenge here was consumers not realising how much their prices could increase, with 40% saying their biggest concern was being unable to anticipate the scale of a price increase.
In addition, 62% of participants said they would seek to change providers at the next possible opportunity if prices were raised unexpectedly.
In February, Ofcom launched a review to examine whether inflation-linked, mid-contract price rises give phone and broadband customers sufficient certainty and clarity about what they can expect to pay. Initial research showed that over one third of mobile and broadband customers were unsure if their provider could increase its prices.
“Customers need certainty and clarity about what they will pay over the course of their contract. But inflation-linked price rises can be unclear and unpredictable. So we’re concerned that providers are making it difficult for customers to know what to expect,” said Ofcom Director of Telecoms Consumer Protection, Cristina Luna-Esteban in a statement.
“We’re calling for an end to the practice of inflation-linked annual price rises in broadband and mobile contracts,” said Uswitch spokesperson and Head of Broadband and Mobiles Ernest Doku.
Which? Also voiced a similar complaint, noting that on average, EE, Three and Vodafone customers could see increases of more than 8% in 2024, while O2 customers could see their bills increase by over 10%.
“We’re taking a thorough look at these types of contract terms, to understand fully the extent to which customers truly know what they’re signing up to, and whether tougher protections are needed,” said Ofcom.
This year, the UK Committees of Advertising Practice have also provided new guidance about how operators and ISPs should communicate price rises to customers, which will be enforced at the end of the year.
“In short, it is crucial that information about any future price increases are clear to consumers in the ad itself, to avoid creating a misleading impression that the initial stated price will remain the same throughout the contract period,” said the Advertising Standards Authority.
Ofcom is expected to publish its consultation paper on the review in December.
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