You may have recently noticed clauses like the following in your mobile or telecoms contracts:

“The plan price will be increased on or after 1st March every year from March 2023 by the Consumer Price Index rate of inflation published in January of that year plus 3.9%.”

Rather than containing a fixed price, many contracts for mobile and broadband services now provide for price increases (usually linked to inflation) during the term of the contract. Given the current high rate of inflation, people are seeing significant price increases.

Last year we wrote about the fact that CAP and BCAP were consulting on guidance that would require information about mid-contract prices to be more prominently stated in telecoms ads across media, to avoid misleading consumers.  We are awaiting the results of that consultation.

Separately, Ofcom has now launched a review to examine whether inflation-linked, mid-contract price rises give phone and broadband customers sufficient certainty and clarity about what they can expect to pay. Ofcom says that it is concerned about the degree of uncertainty consumers face about future price rises specified in contracts on the basis of inflation. 

It has carried out research which indicates that around a third of mobile and broadband customers do not know whether their provider can increase their price. Among those who do know their provider can increase their price, around half do not know how this would be calculated. And nearly half of all customers do not know what CPI and RPI measure. As a result, Ofcom plans to examine these issues in detail to see if more rules are needed. It expects to publish its initial findings later in the year.

Ofcom changed its rules in June 2022 to say that providers who specify price rises in contracts must make this clear before customers sign up. In December, it launched a separate enforcement programme regarding this.

Companies in the sector are advised to review their consumer contracts and communications to make sure they are clear and transparent, so that they are prepared for any further rules Ofcom may introduce.  We can help review your terms and customer-facing materials.