Broadband and mobile phone companies are to be banned from advertising “misleading” fixed-price contracts that fail to warn consumers that they face hefty mid-contract price increases.
Over the past year, telecoms providers have been surprising customers by imposing inflation-exceeding rises on their broadband and mobile phone payments mid-contract.
In many cases these rises were about 14% and for some they were close to 17%. April’s increases by the likes of BT and Vodafone were so big that they have been cited as part of the reason that month’s inflation figure fell by less than forecast to 8.7%.
There is little mention of these increases in the marketing of broadband and mobile deals, which are typically advertised using a figure for the monthly cost, for example £20 for 18 months. Buried in the small print, is the fact that the provider has the right to raise the price by inflation, plus a named figure, in many cases between 3-4%.
After a public consultation, the Advertising Standard Authority’s sister body, the Committees of Advertising Practice (CAP), now says it will ban adverts that do not make this fact clear.
From December, those that imply that a price will apply for the full term when there is actually a mid-contract increase will not be acceptable.
The CAP, which is responsible for writing and enforcing the UK advertising codes, said price claims would have to be qualified with “equally prominent information” alerting consumers to the presence or possibility of a mid-contract price increase.
It has also warned providers that inflation terminology will have to be presented in a way that is “clear and simple to understand”.
A CAP spokesperson said: “It is crucial that information about any future price increase is made clear and upfront to consumers in the ads they see and hear, to avoid creating a misleading impression that the initial stated price will remain the same throughout the contract period.”
News of the change was welcomed by the broadband supplier Hyperoptic, which has long campaigned for such a move.
Hyperoptic’s policy director, James Fredrickson, said: “We are delighted that CAP is bringing significantly improved transparency to broadband pricing. This is an outcome we have been actively campaigning for.
“For too long, broadband advertising rules have allowed mid-contract price hikes to be kept in the small print, leaving millions of customers unaware of what they’re really signing up to.
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“While today’s CAP announcement grants a six month grace period, given the high rate of inflation and squeeze on household incomes, government should be pushing all operators to comply with these new rules with immediate effect.”
Alex Tofts, a broadband expert at Broadband Genie, said: “While the Advertising Standards Agency does not have the power to ban mid-contract price rises, it can make sure the public are made more aware of them, and this is a positive step forward in that fight.
“When telecoms customers sign up to a contract, they expect to pay the same monthly price throughout, but only a handful of smaller providers commit to that promise.
“The problem for many is that these price rises are linked to inflation, as well as charges directly set by the provider. In a year that has seen inflation go above double digits, it means that most broadband, TV and mobiles customers have seen price rises unlike anything they have experienced before on their telecoms bills.”
