Yahoo Finance BT investigated over inflation-busting price rises in customer contracts
BT is facing a fresh investigation into whether it obscured inflation-busting price rises in its contracts, as customers brace for a sharp increase in their bills.
Ofcom said it will examine whether the telecoms giant had failed to provide clear warning of upcoming price increases to customers of its broadband subsidiary Plusnet.
The regulator had already launched an investigation into similar potential breaches by BT’s mobile network EE.
Under new rules rolled out in June, telecoms companies must provide a brief one-page summary of the main terms of a customer’s contract before it is signed.
This must include details of any mid-contract price increases and provide an illustrative example in pounds of how much more the customer may have to pay.
Providers must also provide this information free of charge in an acceptable format to any customer who needs it due to their disabilities, for example in large print or Braille.
Ofcom opened its initial investigation into EE in October, but said on Monday it was expanding the probe to include Plusnet after receiving further information about potential breaches.
Scrutiny of contracts comes as customers brace for sharp increases in mobile and broadband payments that will add more than £50 to the average annual bill.
Customers of BT, Vodafone and Three face a rise of 14.4pc in April, after the latest inflation figures showed UK prices are still rising by more than 10pc. The telecoms companies link their prices to the consumer price index plus 3.9pc.
Customers on Virgin Media O2 will see their bills rise even higher, as they are linked to the retail price index (RPI), which currently stands at 13.4pc. Virgin Media O2 contracts dictate that prices rise by RPI plus 3.9pc each year.
Mobile and internet firms have defended the large price increases, saying they have to cover rising costs and arguing that contracts still offer good value for money.
But the ballooning bills have prompted a backlash from politicians and consumer groups, as well as more intense scrutiny by Ofcom.
Culture Secretary Michelle Donelan this month said imposing above-inflation price rises was “not the right thing to do”, adding that she would be writing to the companies.
The investigations into BT come on top of a broader industry-wide review by Ofcom into whether providers have been up-front enough about in-contract price rises. The investigation covers contracts taken out between March 1 2021 and June 16 2022.
A BT Consumer spokesman said: “We want our customers to be fully informed and we make sales information upfront, clear and transparent. We are fully engaged with Ofcom during the course of this investigation.”
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