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Telecoms and media regulator Ofcom has launched a consultation on new rules that will force providers of landline, broadband, TV and mobile communications services to notify their users when they approach the end of their minimum contract period.
Currently, 20 million people in the UK are thought to be outside their minimum contract period, and more than 10 million of those face higher prices when their initial contract periods expire, as much as 20% on some bundled landline and broadband tariffs.
However, because there is currently no obligation to inform them that they could save money either by changing onto a different contract, or by switching provider altogether, many are languishing on out-of-date deals that cost them more than necessary.
Ofcom’s plan to impose regulations that would notify customers when their contract is ending, and of any changes to prices and services, forms part of its wider ongoing plan to improve market competitiveness by increasing the amount of people who shop around for better deals, keeping providers on their toes when it comes to offering more innovative service packages.
“We’re concerned many people are paying more than they need to, particularly those who are out of contract,” said Ofcom consumer group director Lindsey Fussell.
“Customers have told us they want to be alerted when their phone, TV or broadband contract is coming to an end, and get advice on their options. Under our plans, providers would have to do exactly that.”
If imposed, the new regulations would also see providers made to send a one-off out-of-contract notice to all current customers whose initial contracts are up and had not been previously told.
Alerts would be sent to all residential customers and businesses with under 10 employees using their preferred communications channel – such as email, letter or text message – between 40 and 70 days before their contract expiry date.
Richard Neudegg, head of regulation at consumer service comparison website uSwitch.com, welcomed the proposals, saying that uncertainty over contract dates cost consumers £40 every second, or £104.9m per month.
“Telecoms providers have avoided giving out this information for years. The proposal for a one-off notification to customers who are currently out of contract is especially important to redress this gap,” he said.
“Ofcom needs to make sure that there are no loopholes in its proposals, to ensure they are as helpful to these consumers as possible, and do not allow important details to be hidden in the small print.”
However, added Neudegg, with a 10-week consultation timetable – Ofcom’s consultation will run until 9 October 2018 – and a likely implementation period of at least six months, it would be well into 2019 before consumers in expired contracts saw any financial benefit.