Ofcom forces U.K. networks to let customers end contracts if they raise prices

One of the most bitter pills to swallow as a mobile network customer is being told, less than halfway through your two-year contract – that the price of your plan is going up, and there’s nothing you can do about it. Today, the U.K. telecommunications regulator, Ofcom, revealed plans to impose new restrictions on networks when it comes to this practice, and to provide additional protection for consumers.

From 23 January 2014, new Ofcom guidance will come into effect, which directs carriers on “how to interpret and apply current telecoms sector rules” with regards to mid-contract price increases. Ofcom has said that it will view “any increase to the recurring monthly subscription charge in a fixed-term contract as ‘materially detrimental’ to consumers”.

Further, it instructs service providers that they should “give consumers at least 30 days’ notice of any such price rise and allow them to exit their contract without penalty”. This means that if your network decides to increase prices during your contract, you can end the contract immediately, and – with the exception of collecting any outstanding balance on your account – they won’t be able to do anything about it.

The good news is that these changes will apply not only to mobile contracts, but also those related to landlines and fixed-line broadband. However, the changes will apply only to new contracts after that date. You won’t be able to wriggle your way out of an existing contract purchased before then.

Your provider will still be free to make changes to what’s included for the price that you pay, but Ofcom says that it “would regard such action as a price increase – as consumers would be getting less for the same money”, so you would still be able to end your contract without penalty if your carrier decides to reduce your data allowance, for example. 

Ofcom’s Consumer Group Director, Claudio Pollack, said in a written statement:

Ofcom is today making clear that consumers entering into fixed-term contracts must get a fairer deal. We think the sector rules were operating unfairly in the provider’s favour, with consumers having little choice but to accept price increases or pay to exit their contract.”

The moves will be particularly welcome for U.K. consumers as many now consider renewing their contracts with the rollout of 4G LTE services from numerous carriers, including EE, O2, Vodafone and Tesco Mobile

Source: Ofcom 
Image based on 'Contract Signing' via Shutterstock

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I'm surprised that it took this long for them to regulate this...in the US I've gotten out of contracts due to a price increase of just 5 dollars per month

...great to see this being implemented well after BT starts charging for a free extra you can't get rid of...

This has always been the case but when they increase prices that dont affect you like using your phone to call abroad then you cant claim under it. Orange did this and i couldnt get out of it because i never called abroad. I wonder if this will change under these new laws.

I'd like to comment that in the case of EE their contract was already legally void; indeed my contracts were cancelled without prejudice late last year on the caveat I didn't sue EE. I then in turn wrote to OFCOM and publicised the dealings I had with EE contributing to this news today.

Whilst you have always been able to exit a contract if they unreasonably raised prices, Telco providers usually have buried in their contracts that they can raise prices in line with inflation at any time which they were entitled to do. This new ruling now eliminates that.

Yeah, this annoyed me to no end with O2. They raised prices, to the penny, in line with the CPI because it's buried in page 20 of the contract.

It's become an issue because it's been recently discovered that operators were outright lying. Even though it's in the contract, if you asked "will the price go up or is it fixed" they'd say it wouldn't go up. And then put it up.

I thought this was the norm on any contract. They are effectively breaking their end of the agreement.

How is this not just something that every contract of this nature has. I'm stunned.

Nashy said,
I thought this was the norm on any contract. They are effectively breaking their end of the agreement.

How is this not just something that every contract of this nature has. I'm stunned.

If I recall correctly, my contract has a clause against "unreasonable price increases", which states that T-Mobile can't raise their prices more than the rate of inflation (or some other arbitrary percentage) annually. Of course they raise their prices EXACTLY this percentage every year, and there's nothing I can do about it .

Nashy said,
I thought this was the norm on any contract. They are effectively breaking their end of the agreement.

How is this not just something that every contract of this nature has. I'm stunned.

It is in certain countries. No contract can undermine your statutory rights.

The funny thing is that it took them years to do something so blatantly obvious, which has been a law in many other countries for years.

Good. If a phone company is in breach of the contract you should be able to tell them to shove it. Its the equivalent of telling them you suddenly want to pay less just because.

What if you have a phone free or subsidised in that contract? Will you have to pay some or all of its price before you can cancel?

in France, if the operator tries to raise your plan, whatever the reason, you can end the contract and keep the subsidised phone at no charge. However if the phone isn't subsidised but paid monthly alongside your mobile contract (a separate line on the invoice), you have to finish the credit payments

I find it quite astonishing that this wasn't the case before in a country like the UK. Here, in France, this kind of regulation has been enforced for many many years.

Anyway, great news for our British Friends or Best Ennemies ;-)

Generally this HAS always been the case.

If they raise their prices "above what's considered reasonable" you could cancel without penalty..... trouble is their were no guidelines as to what was reasonable except for inflation and their was an argument that any increase over this could be seen as "unreasonable" if your finances were so tight you could only just afford the contract.

I remember a mass exodus from T-Mobile several years back when they planned on introducing a £1.50? Charge to Itemised Billing and several people left keeping their handsets.

They "waived" the charge if you tried to cancel under the clause however I remember a friend of mine joyfully stating "Im 1 month into the contract and I can cancel and keep my handset for free..... Id rather cancel and teach you greedy b******* a lesson.

pmdci said,
Shocking isn't it? Sadly, consumer rights in the UK is greatly undermined.

Well not really. From talking to friends in the US and Canada, they wish that they could utter the words "Trading Standards" or "Citizens Advice " and send a shiver down the spine of the seller in question.

The amount of time's them words have changed the tone of the seller is remarkable. It's like Voldemort to them.

DaveGreen93 said,
Very much welcomed, Orange raised their prices 5 months or so into my 24 month contract. Wasn't particularly thrilled about that.

Yep. My 24-month contract with T-Mobile now costs £38, despite being called "Full Monty 36" (36 being the original cost)