Rollover landline contracts face the axe

Proposals set out today by communications regulator Ofcom could see these home phone tie-ins outlawed by the summer (see the Home Phones guide).

Ofcom is concerned rollover contracts – which apply to 15% of residential users – make it harder for customers to switch providers.

It says culprits include the biggest home phone firm BT and several smaller providers.

Although its plans are under consultation until 12 May, the regulator hopes a ban will come into force a few weeks later.

Rollover contracts automatically tie users into a new deal on expiry, with penalties for leaving, unless the consumer actively opts out of renewal. Customers typically have 30 days before the contract ends to do so.

Robert Hammond, from lobby group Consumer Focus, says: "This ban cannot come a moment too soon."

Archna Luthra, MoneySavingExpert.com consumer products analyst, says: "This is a sharp practice from landline providers, designed to catch consumers out in the worst way possible.

"Let's hope Ofcom goes ahead with the proposals otherwise consumers will have to be extra vigilant."

Beat the tie-ins

Ofcom rules introduced last year mean landline customers who want to switch while tied into a contract can pay a reduced early exit fee.

Instead of paying the full monthly cost for the remaining term, BT now charges £3 per month for rollover contracts (£5 for others), TalkTalk charges £3 per month and Virgin Media £4 per month (see the Home Phones guide for the best deals to switch to).

A BT spokesman defends its policy: "BT is disappointed Ofcom is proposing to ban renewable contracts.

"Our customers tell us they are happy with the discounts offered by these contracts.

"We have questioned the validity of some of Ofcom's analysis, and we don't believe its proposals have our customers' best interests at heart."

Further reading/Key links

Slash call costs: Home Phones, Cheap Mobiles