Ofcom acts to make it easier for consumers to walk when price rises happen
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.