UK Consumers Able to Terminate Mobile Contracts Without Penalty if Costs Rise
Published on: 22nd Jan 2014
By: Simon Davies
A new code of practice is coming into effect in the UK for consumers and small businesses taking out new landline broadband or mobile contracts that says that they should be allowed to exit them without penalty if their provider increases the monthly subscription price agreed at the point of sale.
This follows an Ofcom review into the fairness of contract price terms. This found that many consumers, in particular, were caught unawares by price rises in what they believed to be fixed price contracts.
The new guidelines sets out that if a provider wishes to increase the monthly subscription price (or prices) agreed by the customer at point of sale, customers should be given at least one month's notice of the increase and be allowed to end the contract without penalty.
It also states that any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently.
Ofcom said that it will monitor providers' application of the Guidance and complaints closely to assess the effectiveness of this new protection. Ofcom will also conduct research, such as mystery shopping, to assess the transparency of contractual information given to customers by providers at the point of sale.
Claudio Pollack, Ofcom's Consumer Group Director said: "We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases."
"Additionally, our new guide highlights important factors customers might want to consider before entering into a new contract to help them understand exactly what they are signing up to."
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