Broadband, phone and mobile customers could gain the power to end their contract without penalty if prices increase.
At present customers are generally unable to exit a contract if prices increase during its term without paying a penalty. The only exception is where a provider agrees an increase would to cause a ‘material detriment’ to the consumer.
Customers of mobile operator O2 were recently told they would be charged an early termination fee if they did not wish to be bound by the firm’s price increase.
Telecoms regulator Ofcom is proposing to change its General Conditions. which all communications providers must follow as part of their operating licence, to introduce a new right to cancel.
Suppliers would still be able to increase prices but consumers would gain a new right to withdraw from the contract without penalty.
Ofcom says the change “would address consumer concerns that it is unfair that providers are currently able to raise prices, while they themselves have little choice but to accept the increase or pay a penalty to exit the contract.”
Other proposals published by Ofcom today include tackling the lack of transparency around the potential for price increases and whether consumers should have to actively ‘opt-in’ to any variable price contract.
The regulator says these options “are unlikely to be sufficient” to address the consumer harm identified by research it conducted last year.
Claudio Pollack, Ofcom’s Consumer Group Director, said: “Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts.
“Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises.”
A consultation on the proposals is now open and closes on 14 March 2013. Ofcom says it expects to publish a decision in June 2013.
