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Ofcom acts to make it easier for consumers to walk when price rises happen
Wednesday 23 October 2013 10:42:31 by Andrew Ferguson

Every year sees us run a number of news items on price rises for telephone line rental, with the attendant questions of whether a rise of 50p per month or £1 is materially detrimental and thus allows people to exercise their rights to exit a fixed term contract. Ofcom has now moved to make things a little clearer for the consumer, by stating that any price rise to the core subscription price is likely to be regarded as materially detrimental and that operators should inform consumers of their right to terminate a contract as a result of the price rise.

"1.2 The guidance sets out that:

  • we are likely to regard as materially detrimental (or likely to be materially detrimental), for the purposes of GC9.6, any increase during the fixed term of the contract to the core subscription price charged to consumers and small business customers by Communications Providers ("CPs") to whom GC9.6 applies; and
  • in respect of such price rises CPs should give consumers and small business customers notice of the price rise and the right to terminate their contract without penalty in accordance with GC9.6.

This position reflects that the core subscription price is likely to be the most important aspect of one of the key terms of the contract (the price).

1.3 The guidance does not apply to any increase to non-subscription prices , which will continue to be subject to the current regulatory protection provided by GC9.6 (but not the guidance) and relevant consumer legislation (which applies to all price increases).

Ofcom guidance note on General Condition 9.6 ("GC9.6")

In plain English this means if you are in an 18 month broadband and telephone contract and you are notified of a 30p per month increase in telephone line rental you can ask to migrate elsewhere and not have to pay any early contract termination fees. There may though be other items such as broadband hardware or other hardware that have to be returned.

Generally the larger providers are fairly good at communicating changes to pricing, but where the last couple of years has seen regular price rises in areas such as voice line rental the new rules may result in less frequent rises but larger rises. Or situations where providers have a much wider range of tariffs depending on when people actually joined the provider. We have seen some providers adopt this later policy with the result of confusion and panic and in the long term customers stranded on older tariffs and missing out on upgrades sometimes.

Comments

Posted by herdwick over 3 years ago
"1.28 Ofcom will adopt the approach set out in the guidance three months after the date of publication of this statement. It will apply in relation to any new contracts entered into on or after that adoption date."

"1.30 For existing contracts, GC9.6 will continue to apply as it does now. Any question regarding whether a price increase meets the material detriment requirement will be considered on a case by case basis."
Posted by Michael_Chare over 3 years ago
How soon after a price rise is announced or comes into effect do you have to give notice? Could you for example use the price rise as an excuse to escape from a contract 4 months after the prices rise starts?
Posted by andrew (Favicon staff member) over 3 years ago
Minimum notice period for rises will be one month - aligned with EU requirements. No new wording on how long after the rise you can escape, but if the notice was buried in a bigger newsletter you would have to battle it.

Not that much different to the current situation apart from the ANY PRICE RISE is detrimental, whereas there was a 'reasonable' level allowed.
Posted by realj42 over 3 years ago
This does appear to have worked - got an email yesterday from BT to inform me of the line rental going up to £15.99 in January - buried at the bottom of the mail is this line
"If this change means you want to end your service, you can do that by telling us within ten days of receipt of this email without needing to pay a charge for ending your contract early."
Posted by andrew (Favicon staff member) over 3 years ago
@realj42 That is how it should have worked before even todays news. The difference is that while a provider could contest that a 50p per month rise was not materially detrimental on a £30 contract previously, they now cannot under new guidance.
Posted by mervl over 3 years ago
Good. Next problem: where do you walk to? Or will Ofcom sort that one out for you too?
Posted by pcoventry76 over 3 years ago
Sky didn't even tell me the prices were going up. I asked them what the Early fees were but all I got was 3 e-mails telling me what thet meant and not the amount. So I then said that due to the price rise I wanted out anyway and I am waiting for their reply. I'm glad this has been printed as it's clarification for consuomers
Posted by sidsen over 3 years ago
Three months into my two year Mobile monthly package deal, EE decided to increase my direct debit though I never went beyond my monthly entitlement of free calls, text and data.
Does this new rule from Ofcom cover mobile telephony as well?
Posted by chrysalis over 3 years ago
I think adding small print to the bottom of an email with a 10day deadline isnt reasonable, complaint already sent to ofcom. Ofcom initially rebuffed me, I then reminded them of certian trading laws, they then after about 2 weeks replied stating they conacted bT on my behalf and BT have offered em a get out with no penalty (with no deadline) I replied to ofcom again stating not good enough, that the turnaround from BT was an admittance its wrong and BT need to enforce a no deadline policy, still waiting next reply.
Posted by chrysalis over 3 years ago
I meant ofcom need to enforce, sorry for all the typos.
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