Mobile phone, Pay TV and broadband firms could be banned from using inflation to increase prices mid-way through contracts under proposals put forward by Ofcom.
Most major firms now include clauses which allow them to hike prices by inflation plus an additional percentage each year, but the telecoms and media regulator says its “concerned” that customers cannot know how much their prices will actually go up by due to the uncertainty of inflation rates.
It’s proposing that instead of using an inflation-based formula for increases, firms would instead set out “in pounds and pence” how much prices would rise.
Ofcom will consult on the new requirement until 13 February 2024, and will set out a final decision in spring 2024.
Chief Executive Dame Melanie Dawes said: “At a time when household finances are under serious strain, customers need prices to be crystal clear.
“But most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.
“Our tougher protections would ban this practice once and for all, giving customers the clarity and certainty they need to secure the best deal for their needs and budget.”