Banned: Surprise mobile mid-contract price rises

Mobile, broadband, and pay-TV companies will no longer be allowed to suddenly raise prices during a customer's contract period, as a ban from regulators is about to take effect. Starting with new contracts from this Friday, providers must inform customers of any price increases, and when they will occur, in "pounds and pence" before the customer agrees to the contract.

Previously, the UK's communications regulator, Ofcom, received numerous complaints about unexpected and significant price hikes during a period of surging energy and other bills, leaving customers unable to reasonably plan their budgets. Citizens Advice stated that this move does not completely ban price increases during the contract period.

In recent years, many telecom companies have modified their contract terms to link price increases during the contract period to inflation, typically on top of a standard 3.9% increase. Tom McInnes, policy director at Citizens Advice, said, "Billions of pounds have been added to bills in the process of getting to this point, and we know that many people are struggling." He also pointed out that, "It's very clear that some customers are ending up with bills that are not just higher than inflation, but potentially even higher than under the previous model."

Natalie Black, Ofcom's director of network and communications, stated that it is now "more important than ever for households to be able to plan their budgets." She emphasized that "our new rules mean there won't be any nasty surprises, and customers will know through clear labeling how much they will pay and when." Ofcom believes that it is unfair to expect customers to adapt to unexpected price increases linked to inflation because inflation measures price increases over time and "can be very volatile and unpredictable."

Providers must now "prominently" display information about price increases during sales calls or in stores to draw customers' attention. Ofcom began investigating this issue in 2003 and stated in its concluding report that price increases communicated in an "unfair" manner "may undermine consumer engagement, damage confidence in the market, and weaken competition." The report stated that as of April 2024, approximately six out of ten broadband and mobile customers' contracts were affected by price increases linked to inflation.