Ofcom enforces ban on ‘nasty surprise’ mid-contract telecoms price rises

A Guardian investigation last year exposed ‘greedflation’ in the telecoms sector, with millions of people facing mid-contract jumps in monthly payments of up to 17.3%Photograph: Yui Mok/PA

Millions of consumers will be protected from “nasty surprises” from Friday as new rules take effect that mean telecoms firms must tell people upfront – in “pounds and pence” – about any future price rises.

It means mobile phone, broadband and pay-TV companies are now banned from imposing mid-contract price increases linked to unknown future rates of inflation.

The changes come 18 months after a Guardian investigation exposed “greedflation” in the telecoms sector, with millions of people facing mid-contract rises in monthly payments of up to 17.3%.

Ofcom, the telecoms regulator, is forcing firms to set out upfront, in clear monetary terms, details of any expected rises throughout the duration of their deals.

To illustrate how the new rules work, Ofcom gave a sample scenario of an individual taking out a £30-a-month mobile phone contract. Until now, their contract might have stated that the monthly cost “will increase every April by the consumer price index rate published in the previous December, plus an additional 3.9%”.

From Friday, wording of that type will be swept away and inflation can no longer be used to calculate the new billing arrangement. Instead, the contract may typically state that the monthly price is “£30 until 31 March 2025, increasing to £31.50 on 1 April 2025 [and] £33 on 1 April 2026”.

Ofcom said: “From today, any price rise written into a customer’s contract will need to be set out in pounds and pence, prominently and transparently, at the point of sale, and providers will need to be clear about when any changes to prices will occur.

“This will give consumers clarity and certainty about the prices they will have to pay, helping them choose the best deal for their needs.”

The previous system made it “complex and laborious” for customers to estimate what they would pay, said Ofcom, which announced the rule changes last July.

The Guardian investigation in June 2023 found that six companies controlling most of the telecoms market all charged a 3.9 percentage point supplement on top of their annual inflation-linked increases that year.

It meant many customers faced mid-contract price increases of up to 17.3%. generating billions of pounds in extra revenue for providers, according to estimates, and leading to warnings that the practice risked prolonging the cost of living crisis.

Ofcom’s group director for networks and communications, Natalie Black, said: “More than ever, households want and need to plan their budgets. Our new rules mean there will be no nasty surprises, and customers will know how much they will be paying and when, through clear labelling.”