Ofcom is consulting on whether consumers should be allowed to exit contracts without penalty if prices are increased mid-way

Mobile customers may be able to exit their contract mid-way without penalty if their provider increases prices, under new proposals from Ofcom.

The telecoms regulator today launched a consultation on how to protect customers from price rises during fixed contracts for landline, broadband and mobile services. It follows a review into the fairness of contracts, which identified issues concerning existing rules.

Ofcom’s proposed change would still allow operators to increase prices during fixed-term contracts, but consumers would be free to leave if they didn’t accept the rise.

Other options mooted in the consultation include whether consumers should have to actively ‘opt-in’ to any variable price contract.

The regulator is also looking into the need for guidance on how providers should interpret its rules.

It rejected the idea of a complete ban on price rises in fixed contracts.

Ofcom’s consumer group director Claudio Pollack 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.”

The consultation closes on 14 March and Ofcom expects to publish a decision in June.

Operator follows Three in committing to fixed price line rental for all customers during their contract term

Vodafone is introducing a fixed price promise, meaning new and existing customers will not have the price of their line rental increased mid-contract.

This applies to all Vodafone customers, and not just those signing up after January 23, ensuring monthly mobile or tablet line rental cost will remain the same for the contract term.

The operator said that in line with Ofcom guidance it may still change prices outside of the monthly line rental agreement. These would include premium rate numbers, non-geographic numbers and calls, text and data use outside of allowances. It will however notify customers of any changes that might affect them in advance.

The new rule by Ofcom came into force on this date, stating consumer and small businesses hit-by mid-contract price rises can now switch mobile provider without penalty.

The guidelines stated that if a provider wants to increase a monthly subscription price agreed by the customer at the point of sale, customer’s should be given at least one month’s notice of the increase and be allowed to exit the contract without penalty. It also stated that any changes to contract terms must be communicated clearly.

However, O2 announced four days later on January 27 that it was avoiding the Ofcom ruling by increasing contract customers for existing customers by 2.7 per cent. It said its ruling was in line with the Retail Price Index (RPI) the same month and took effect from a consumer’s March bill date, applying to customers on O2 prior to January 23.

Vodafone UK consumer director Cindy Rose said it found a survey conducted of 1,000 of its customers from April 11-12, most of them disagreed with increasing prices mid-contract.

“We asked our customers what they thought was fair when it came to charging, and the clear majority told us that it was unacceptable to increase monthly prices during the contract term.

“So from now on, when you sign up with us, a deal’s a deal, and we promise the monthly price you pay will stay the same for the period of your contract term, provided you stick within your allowance.”

uSwitch.com analyst Ernest Doku said it was called mid-contract price rises a “proverbial kick in the teeth” but said this announcement was a “welcome move”.

“We have long pushed for more transparency and fairness with regards to mobile billing and this announcement is great news for Vodafone new and existing pay monthly customers. Signing up to a contract, only to get told mid-way through that prices are going up is a proverbial kick in the teeth and has been a bugbear for consumers for a long time.

“It’s a welcome move and clearly a result of Ofcom’s announcement which came into force in January that enabled customers to walk away from mid-contract prices hikes.

“But don’t forget that Vodafone still reserves the right to change prices outside of your monthly line rental agreement, so keep an eye on calls to premium rate numbers, non-geographic numbers and calls, texts and data used outside of your allowance.

“Hopefully this step will make other providers follow suit, but for now, Vodafone and Three are leading the way.”