Consumers to receive end-of-contract and best deals notifications under new Ofcom rules

Ofcom wants to encourage customers to take advantage of choice in broadband, phone and TV

Broadband, phone and TV companies must tell customers when their contract is coming to an end and show them the best deals available under new rules announced by Ofcom this week.

The regulatory body said it wants "customers to be able to take advantage of choice in broadband, phone and TV" and to "get the best deals for their needs" when switching provider or agreeing a new deal with their existing one.

Ofcom is now asking TV, mobile and home phone companies to send their customers information about their contract, when needed, so they can choose the best package possible.

Research from the regulator shows that over 20 million customers have passed the initial contract period and that many of them may be paying more than they need to.

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"People who bundle their landline and broadband services together pay, on average, around 20 per cent more when they are ‘out of contract'. This rises to 26 per cent among customers who bundle their pay TV with these two services," said Ofcom in a media release.

"Around one in seven customers (14 per cent) don't know whether they are still tied to their original deal; and around one in eight (12 per cent) believe they are ‘in contract', but don't know when this period ends."

In a move "to ensure fairness for customers", Ofcom has made it a mandatory requirement for telecoms and TV companies to warn customers between 10 and 40 days before their contract ends.

They will have to send alerts via text, email or letter containing information such as:

• The contract end date;
• The price paid before this date;
• Any changes to the service and price paid at the end of this period;
• Information about any notice period required to terminate the contract; and,
• The best deals offered by their provider, including telling loyal customers what prices are available to new customers.

And for people who stay with an existing provider, they'll be sent an annual reminder detailing their firm's best deals.

Lindsey Fussell, Ofcom's consumer group director, said: "We're making sure customers are treated fairly, by making companies give them the information they need, when they need it.

"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."

Ofcom added that the changes "will involve providers sending personalised and tailored information to millions of individual customers" and that "companies will have nine months to make the necessary changes to their systems and processes". Alerts will begin from February 15 next year.

Richard Neudegg, head of regulation at uSwitch.com, said Ofcom is finally moving the telecoms sector towards what consumers have come to expect in other areas, such as energy and insurance.

He said: "uSwitch's research found that the aggregate cost of out-of-contract charges to telecoms consumers is £41 a second. This is why time is of the essence - everyday spent waiting for these notifications to be rolled out, another £3.5 million is overspent on these services - meaning that more than £350 million has already been wasted since the consultation closed in February.

"It is worth pointing out that consumers should be wary of the ‘best tariffs' outlined by their providers in these notifications as they will not necessarily be the cheapest or most suitable deals in the market. For an accurate picture of better offers available, as ever, consumers as advised to shop around.

"While it has been a long time coming, this is an important step by the regulator to address what has long been a clearly unacceptable gap in the rules, penalising consumers to the tune of millions."

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