Ofcom: Internet, TV, Phone Providers Must Issue End-of-Contract Alerts
New regulations will see service providers forced to notify customers when their contracts are due to expire and advise them on their best available alternative deals.
Regulations brought in by UK Watchdog Ofcom will help people avoid being locked-in to costly contracts without realising it.
Those who choose not to switch package will be reminded yearly that they can still do so if they wish. Plans for the new regulations, which will help ensure people benefit from end-of-contract deals, were announced in July last year. Companies must start sending out notifications as of February 2020, which gives service providers nine months to update their current systems.
After the February deadline, service providers will be forced to send text, email or letter reminders to their customers between 10 to 40 days before their contract comes to an end. These notifications must include the following information:
- the date their contract can be terminated without a penalty
- the price they have been paying
- any changes to the price or service that automatically come into effect after the date
- how much notice they need to provide to cancel the deal
- the best alternative subscription on offer, including the price charged to new customers
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Lindsey Fussell, Ofcom’s consumer group director, said: “This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.” According to research commissioned by Ofcom, 14% of customers are unaware if they are tied to their current contract or not.
The report also found that customers usually cut the cost of a bundle of services involved by roughly 20% if they opt to sign up for a new deal rather than stay on their contract beyond its minimum period. But, a number of consumer rights groups felt that the new measures don’t go far enough.
Citizens Advice told Ofcom that providers ought to be made to send out multiple notifications to each customer and that companies should be made to disclose how many of their customers are out-of-contract.
In addition, service providers should be made to make subscribers aware how much extra on average they are paying compared to in-contract users.
Gillian Guy, Citizens Advice’s chief executive, said: “Almost nine in 10 people think that charging loyal customers more is unfair, and we agree. We look forward to hearing about the concrete actions Ofcom will take to end this systematic scam.”
The Internet Services Providers’ Association, a small trade group, voiced concerns that small internet providers that specialise in serving business customers could struggle to comply with the new regulation due to the cost and complexity of updating their systems.
“[The Internet Services Providers’ Association] is concerned at the lack of clarity around small business customers…as it does not seem to take into account the scale and nature of this market,” said a spokesman for the organisation. “We hope that Ofcom will address this going forward.”