Millions of consumers are paying too much for their broadband, TV or landline service, the regulator has said.
More than 20 million customers are outside of their minimum contract period and paying more than the price they initially signed up for.
New plans proposed today will mean providers will have to contact customers when their contract comes to an end to tell them if their price will rise.
More than 20 million consumers pay more to their provider than their initial contract price
They will also need to tell consumers if they can save money by switching and give them details of any change to the service.
These alerts will help consumers to avoid price increases and to find the most competitive deals on the market, Ofcom said.
It says more than 10 million households are signed up to a package deal where the price they pay will rise automatically when the initial contract comes to an end.
Those paying for a package deal where the price rises when the initial contract ends are paying 20 per cent more when they are out of contract.
Most providers do not tell customers when their price is about to rise or explain what will happen at the end of the contract.
These contracts are usually for 12, 16 or 18 months and the price after this time increases. The contract typically becomes a monthly rolling contract, which the customer can cancel at any time and will usually need to give 30 days’ notice.
The regulator says lots of consumers don’t know if they’re still in this minimum contract period or not and therefore stay on more expensive deals for longer.
Lindsey Fussell, Ofcom’s consumer group director, said: ‘We’re concerned many people are paying more than they need to – particularly those who are out of contract.
‘Customers have told us they want to be alerted when their phone, TV or broadband contract is coming to an end, and get advice on their options. Under our plans, providers would have to do exactly that.’
Rising prices: Households paying out-of-contract prices pay 20 per cent more
Richard Neudegg, head of regulation at uSwitch, says: ‘At long last Ofcom is looking at bringing mobile and broadband providers in line with other industries by ensuring that consumers are told when their contracts are coming to an end.
‘Telecoms providers have avoided giving out this information for years. The proposal for a one-off notification to customers who are currently out of contract is especially important to redress this gap. Ofcom needs to make sure that there are no loopholes in its proposals, to ensure they are as helpful to these consumers as possible, and do not allow important details to be hidden in the small print.
‘As industry, government and regulators focus on upgrading communication networks to make mobile and broadband services faster and more reliable, notifications also represent a great opportunity to alert consumers to the faster and more reliable services now available.’
The proposals have been published by Ofcom this week and it will be consulting on them until 9 October 2018.
They are part of a wider programme by the regulator to help customers get better value for money including receiving automatic compensation, providers giving out more information on broadband speeds before customers sign up to a contract, and making the mobile phone switching process easier.
In November last year, Ofcom announced that automatic compensation would be paid to millions of broadband customers when their service fails.
The regulator said it expected total payments to run to £142 million a year, nine times more than the major players currently pay. The new regime, which will offer £8 a day if the broadband or landline is cut off, won’t come into effect until the beginning of 2019.
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