Mobile phone and broadband providers have been accused of hiding inflation-busting price increases in customers’ contracts as consumers brace for a double-digit rise in their bills next year.
Ofcom, the telecoms regulator, has launched an investigation into whether companies were “clearly upfront” with customers about the fact bills could rise in the middle of their contracts.
Many broadband and mobile phone contracts include a clause that states a customers’ contract will rise with inflation, plus a further set percentage, every year, even in the middle of a two-year deal. BT contracts, for example, rise every year by the rate of inflation in the Consumer Price Index, plus an extra 3.9pc.
These terms have left consumers facing increases of almost 14pc in their bills next year. The Bank of England estimates inflation will run at around 10pc in January, which with the additional fee sets customers up for inflation-beating price rises in April.
The regulator said its investigation would be “industry-wide” and did not specify which contracts or operators had caused particular concern.
Ofcom said that following “consumer complaints… we are concerned that some price variation terms in consumer contracts entered into between 1 March 2021 and 16 June 2022 may not have been sufficiently prominent and transparent”.
The Telegraph revealed in July that Ofcom was considering an investigation into the small print of customer contracts and whether they were fair.
Lindsey Fussell, Ofcom's networks director, said: “As millions of people are having to deal with rising household bills, it is more important than ever that telecoms companies don’t shirk their responsibilities and keep customers fully informed about what they are signing up to.
“It’s vital that people are told clearly upfront about any future price rises they will face while they are in contract, and we’re investigating to check whether this happened in practice.”
Ofcom said a third of UK households, around 9 million people, are having trouble paying for their phone, broadband and streaming bills as costs rise across the economy.
A BT spokesman said its price increases were “clear and predictable, taking place in April each year”. The spokesman said the company was “committed to customers receiving clear communication well in advance reminding them of any change”.
“We follow industry best practice and will be engaging fully with Ofcom’s programme.”
Dana Tobak, chief executive of BT rival Hyperoptic, said: “This is a great step forward in preventing the consumer harm of mid-contract price rises. As we highlighted in my letter to Ofcom in April, there’s overwhelming evidence that consumers are unaware of contract clauses, and how they will be affected by them - which is particularly important in this cost of living crisis.”