Ofcom plans to force phone and TV firms to set out contract prices 'in pounds and pence'

Ofcom has laid out plans to tackle mid-contract price rises, saying phone, TV and broadband customers must be told about possible hikes upfront.

The telecommunications regulator said that inflation-linked price hikes midway through contracts have caused them to become concerned about customers not having "sufficient clarity".

In a proposed new rule for firms, Ofcom said "any price written into a customer's contract would need to be set out in pounds and pence, prominently and transparently, at the point of sale".

They added that would include "being clear about when any changes to prices will occur".

Dame Melanie Dawes, Ofcom's chief executive, said: "At a time when household finances are under serious strain, customers need prices to be crystal clear.

"But most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers' ability to shop around.

"Our tougher protections would ban this practice once and for all, giving customers the clarity and certainty they need to secure the best deal for their needs and budget."

Between January and October this year, Ofcom received over 800 complaints related to price rises - almost double the amount received during the same period in 2021.

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The regulator also found in its own analysis of data that as of April, 11 million broadband customers and 36 million mobile customers were on contracts subject to inflation-linked price rises.

Every April, many broadband and mobile firms raise their prices in line with the Consumer Price Index (CPI) or the Retail Price Index (RPI), plus an additional 3.9%.

According to the Office of National Statistics, the current CPI rate rose by 4.6% in the year up to October.

Which? recently said it expects the bills for customers of EE, Three, and Vodafone to jump by more than 8% from next April, while O2 customers could see rises of more than 10%.

Rocio Concha, Which? Director of Policy and Advocacy, said in a statement to Sky News: "Ofcom proposing to ban unfair and unpredictable mid-contract price rises is a huge win for consumers.

"Which? has spearheaded the campaign to protect millions of households from being blindsided by these huge price hikes by telecoms firms.

"It's positive that the regulator plans to move quickly to consult and implement these proposals. With Ofcom calling time on these unfair price hikes, providers must stop this practice immediately."

In a statement, TalkTalk told Sky News that they and other telecom firms source connectivity from BT Openreach "for the vast majority of the broadband packages we sell".

They added that as the wholesale costs associated with Openreach rise in line with inflation, "we have no choice but to pay that increased cost" and cite it as the main reason behind price hikes.

Tristia Harrison, TalkTalk Group CEO, said: "For 20 years TalkTalk has focused on delivering value for customers in the vibrantly competitive UK broadband market.

"If Ofcom is to push ahead with tying industry's hands on CPI indexed price inflation, we urge them to urgently review similar CPI inflation for BT Openreach at a wholesale level.

"The link between the two is obvious; is essential for protecting both consumers and competition, and needs addressing."

As of this morning, shares in BT are down by 4% while Vodafone's have fallen by 1.6%.

It comes as Vodafone, EE, Three and O2 face a "£3bn-plus" class action claim, which alleges they used their market dominance to overcharge on up to 28.2 million UK mobile phone contracts.