Virgin Media's £240 early exit fee is unlawful, Ofcom rules, as customers could receive compensation

Virgin Media customers who have been hit with "early exit penalties" could be offered compensation as telecoms watchdogs have said the charges are unlawful. 

Home movers were being penalised with excessive "early disconnection charges" when they moved to an area not supported by Virgin Media before their contract ended.

It follows a formal investigation launched in June last year into the fairness of the company's terms and conditions, specifically its charges for ending a contract early, after receiving complaints from customers.

In a preliminary decision published today, Ofcom has said exit fees of up to £240 charged between 1 September 2016 and 11 September 2017 are in breach of the Consumer Rights Act 2015. 

This is largely because the fees charged are too high and will have deterred customers from switching providers.

Consumer rights experts previously damned the telecommunications company, calling the charge "illogical and unfair".

Details of any compensation owed to consumers will be revealed later this summer in Ofcom's final decision. It is understood that Virgin Media could also receive a fine for treating consumers unfairly. 

An Ofcom spokesman said “Having assessed all available evidence, we have reasonable grounds to believe that Virgin Media has broken our rules by overcharging people wishing to leave their contracts early.

“Virgin Media now has an opportunity to formally respond to our provisional decision. We will take any further representations the company makes into account, before making our final ruling.”