Inflation-linked mid-contract broadband, mobile and TV price hikes to be banned
Broadband, mobile and pay TV firms will no longer be able to hit customers with inflation-linked price hikes mid-contract, under proposals put forward by the telecoms regulator. But while MoneySavingExpert.com (MSE) founder Martin Lewis has welcomed the move, he has also called on Ofcom to ensure any rises are never above inflation.
Price rises could be clearly stated in pounds and pence in future
Following a review into inflation-linked mid-contract hikes, Ofcom has said such practices "complicate the process" of shopping around and may prevent people from switching altogether. It added that consumer awareness and understanding of inflation-linking terms was also very low.
The regulator is now proposing a ban on inflation-linked price hikes altogether and is instead proposing two new solutions:
- Providers fixing the price for the entirety of the contract, or
- Forcing providers to outline any mid-contract increase at the point of sale by a "pounds and pence" amount.
Martin Lewis: 'This would be a definite improvement but any rises should never be above inflation'
Martin has repeatedly called for above inflation mid-contract hikes to be banned. Commenting on today's announcement, Martin said he would ask Ofcom to consider changing its proposals, so that any price rise would always be the "lower of CPI [Consumer Prices Index] inflation or a fixed pounds and pence amount".
You can read Martin's post in full below:
Consumer group Which? and charity Citizens Advice have similarly called for broadband and mobile firms to be banned from hitting their customers with unpredictable mid-contract price hikes.
Citizens Advice said today's news was a "much-needed move", though it urged Ofcom to go further by completely banning 'prices may vary' terms.
The problem with mid-contract inflation-linked hikes
Currently, it's common practice for providers to hike up prices midway through a contract by the rate of inflation, plus an extra percentage on top. However, inflation remains an unknown until it's formally announced, so it's always unclear how much your contract will increase by.
Earlier this year, we saw contracts rise by as much as 17.3%. For a family with home broadband, pay TV and several mobile subscriptions, these increases could amount to hundreds of pounds a year. Plus, when a price hike happens, you usually can't leave penalty free as most contracts state that these prices rises can take place.
Check you're not overpaying on your broadband, mobile and TV bills now
Broadband, mobile and TV firms have millions of customers who are out of contract and have simply been rolled on to often pricier tariffs without signing up for them. But if that's you, you can leave at any point penalty-free – and given the best broadband, mobile and TV deals tend to be for newbies, there's a good chance you're overpaying anyway.
Here are our quick steps to cut broadband, mobile and TV costs:
- Check if you're still in contract. An easy way to do this for mobiles is by texting INFO to 85075. This is free, and you should get a text back within seconds showing if you're out of contract (and therefore free to switch).
For broadband or TV, check your online account on your provider's website, or contact its customer services.
If you're still in contract, diarise to shop around and find a new deal as your contract end date approaches. If you're out of contract, you're likely to be overpaying, so follow the rest of the steps below.
- Benchmark prices elsewhere. You can use our Broadband Unbundled tool to search broadband, line and TV deals and our Cheap Mobile Finder tool to see what other deals are out there. You can also see our Digital TV package deals guide.
- Ditch and switch. In most broadband and mobile cases, you just need to contact your new provider and it'll take care of the switch (the process is different when switching broadband to or from Virgin Media or between pay TV providers – see our Cheap broadband guide for more info on this).
Want to keep your mobile number? Text PAC to 65075. You'll be given a code to send to your new provider, which'll transfer your number for you within one working day (there's usually only a couple of hours of downtime).
- Want to stay with your existing provider? Try haggling. See if it will match or beat a deal you've found elsewhere. Telecom firms are consistently among the top companies to haggle with, according to our annual polls of MoneySavers. Our Broadband haggling and Mobile haggling guides have lots of tips on how to do this.