Broadband and mobile firms pledge to stop unexpected bill increases

Major broadband and mobile providers have pledged to stop unexpected bill increases by making pricing clearer for consumers at the point of signing up.

Providers will also make it easier for vulnerable consumers to access social tariffs, which Ofcom has previously estimated could save eligible households up to £220 a year.

Firms will proactively signpost social tariffs to eligible customers and offer customers facing financial difficulty the chance to move to cheaper plans without any penalty and manageable payment plans.

BT, Virgin Media O2, VodafoneThree, Sky and TalkTalk are among the providers who have signed up to the Government’s new Telecoms Consumer Charter.

Under commitments in the charter, customers can expect to be given clear information about any future price rises when they sign up for a new mobile or broadband deal.

Technology Secretary Liz Kendall said: “Following action by this Government, telecom companies have now agreed to end unexpected mid-contract price rises and making social tariffs easier to access.

“These changes will make a real difference to millions of consumers across the country and help with the cost-of-living pressures.”

In November, the Government asked Ofcom to revisit its rules on phone companies raising their prices in the middle of a contract after O2 unexpectedly announced it was raising prices by £2.50 a month.

Ms Kendall said O2’s higher than expected price increase was “disappointing given the current pressures on consumers”.

Last January, new rules cracked down on phone and broadband providers increasing prices in the middle of a contract without warning.

However, O2 announced in November that it would be raising its prices by more than it originally promised, arguing it was able to do so because the increase was not linked to inflation.

It gave customers 30 days to leave without penalty, although they had to pay off the cost of their device.

Virgin Media O2 chief executive Lutz Schuler said: “We welcome this charter which strengthens predictability and transparency for consumers while recognising the significant value the telecoms sector delivers.”

Devesh Raj, chief operating officer at Sky UK, said: “Sky is proud to support this voluntary charter, which strengthens transparency and ensures customers have clear, straightforward information about their services.

“We also recognise the importance of supporting customers who are facing financial pressure. That’s why we continue to promote and improve access to our social tariffs, ensuring that those who need extra help can stay connected to the essential services they rely on.”

Martin Lewis, the founder of MoneySavingExpert.com, said: “I am cautiously optimistic that the Telecoms Consumer Charter is an improvement within the narrow range of issues it addresses.

“It should mean more people are aware of social tariffs, and we are less likely to see a repeat of O2’s ‘price hike on a price hike’, where customers were told at sign-up how much prices would rise by mid-contract, only to be told later they would by hiked even more.

“That ran roughshod over Ofcom’s supposed protections.”

However, Mr Lewis warned that firms following the rules “now simply have to tell customers, in pounds and pence, how much prices will rise by mid-contract” which he said “does nothing to limit the size of the increase”.

He said: “I don’t understand why we don’t grasp what is by far the simplest and most effective solution: ban firms from increasing prices above inflation during a fixed-term contract. Do that, and the job’s done.”

Which? head of policy and advocacy Rocio Concha said: “Following O2’s unexpected price hikes at the end of last year, it’s good to see the Government recognising the impact of this practice on consumers.

“O2 should demonstrate its commitment to this charter by cancelling these unexpected price hikes due to take effect from April – so its customers are not forced to pay more than they originally signed up for.

“However, it will take much more than just voluntary action to shift the dial on unexpected price hikes and social tariffs. Proper enforcement of the law is needed to make pricing clearer for consumers.

“The regulator must also urgently review the rules on mid-contract price hikes to ensure they are fit for purpose, fair for consumers and not open to abuse by providers.”