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Telecoms get-out clauses set-up

23/1/14

By Ian Lewis

New rights allowing consumers to pull out of phone and broadband contracts if providers increase prices on fixed deals have come into effect.

They follow a review by regulator Ofcom into the fairness of terms for fixed contracts for landline, mobile and broadband services.

The review found that many customers were "caught unaware" by price rises.

The new guidance says customers should be given at least one month's notice of any increase to the monthly subscription price agreed at the point of sale.

Exiting a contract without penalty

Customers should also be allowed to exit the contract without penalty.

It also states that any changes to contract terms, pricing or otherwise, must be communicated clearly and transparently.

Ofcom said it would monitor providers' uptake of the guidance to measure its effectiveness.

It will also conduct research such as mystery shopping to assess the transparency of information given to customers at the point of sale.

Better protection against unexpected price rises

Ofcom's consumer group director Claudio Pollack believes the new rights for customers will also give better protection to smaller businesses.

He said: "We have reached an important milestone in our work to ensure consumers and small businesses have better protection against unexpected price increases.

"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."

Which? executive director, Richard Lloyd, said: "This is good news for mobile phone customers, and the 60,000 people who supported our campaign against unfair price rises.

"People can now be confident that the price really will be fixed when they sign a mobile contract, or they can walk away without a steep penalty if faced with a hike.

Scrutiny on mobile phone industry

"We'll be keeping a close eye on the mobile phone industry to make sure it follows this guidance and gives customers clear information about contracts at the point of sale."

Kate Rose, head of household services at Confused.com, said: "This is really good news for consumers and small businesses taking out new contracts from today.

"It provides peace of mind that should their provider increase prices during the contract there is now the option to reject it and change providers without penalty.

"For those who sign up to bundle deals - where you get more than one service from the same provider - it will depend on how the provider structures the package.

"So it’s important to check this when signing up."


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