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New rules on short and simple contract details

Telecoms customers must be provided with clearer and simpler information before they sign up to a new deal, under new Ofcom rules that come into force today.

Customers must now be provided with a short, one-page summary of the main contract terms before entering a contract, including clear examples of how any price increases will affect the price they pay.

This is designed to help people avoid being caught out by surprise price rises, at a time when household budgets are under heavy strain.

The summary must include key information about the speed of the service, price, and length of the contract. It also requires firms to set out the terms and conditions if a customer decides to end their contract early.

Customers with disabilities can also request to receive the documents in an accessible format.

Some providers offer deals that include a price rise linked to inflation that takes effect during the contract.

From today, when customers take out a new contract firms that use this calculation are required to provide a straightforward example to a customer of how this is likely to affect the price they will pay in pounds and pence.

If the increase uses an inflation index such as CPI or RPI, then providers should use the most recent figure for the example.

We are also making it easier for customers to exit their contract if a provider makes any changes to their terms that were not agreed to when they signed up and are not expressly to the benefit of the customer.

For instance, if a provider increases the charge for paper billing, those customers who use that service would need to be notified a month in advance about the change and offered the right to exit, penalty free.

In addition, providers will need to notify all customers of an increase in their late payment charge on the same basis.

Our new rules will give customers key information about the contract they’re signing up to, in a short and simple way. This will mean that people will be provided with a straightforward example of any price rises, which will help them make a fully informed choice about the deal that works best for them.

Cristina Luna-Esteban, Ofcom’s Director of Telecoms Consumer Protection

Notes

  • Individual mobile, broadband, landline and pay-TV contract summaries should be no longer than one page. Bundled contract summaries can run to no more than three pages.
  • Example of wording setting out a price rise could say:
    In April 2023 your price will increase by an amount equal to the RPI rate published in March of that year. Using May 2022’s RPI value of 7.8%, this would mean your monthly price of £40 would increase to £43.12 from April next year.
Channel website: https://www.ofcom.org.uk/

Original article link: https://www.ofcom.org.uk/news-centre/2022/new-rules-on-short-and-simple-contract-details

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