Bills: major change to household bills like phone and broadband under new Ofcom rules - what they mean for you

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The changes should mean no more guessing when it comes to your bills 📊
  • New Ofcom rules require telecom providers to clearly display price increases in pounds and pence
  • Inflation-linked price hikes are now banned, simplifying costs for customers
  • Fixed annual mid-contract price rises are still allowed but must be transparently outlined
  • Customers can cancel penalty-free with 30 days' notice if prices rise unexpectedly
  • The changes aim to prevent ‘nasty surprises’ and help households better plan budgets

A major change is coming to household bills with the aim of preventing the “nasty surprise” of unexpected inflation-based price rises for customers.

Under new Ofcom rules, phone, broadband, and pay TV companies must now clearly display contract price increases in pounds and pence on bills when setting out any hikes.

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They are also no longer allowed to link price rises to future rates of inflation, which often include an extra percentage increase on top, and which made it near impossible for consumers to accurately estimate what they would pay. This change also simplifies comparing deals when shopping for a new provider.

From now on, firms must “prominently and transparently” outline any future price increases at the time of sale, ensuring customers understand their potential costs in pounds and pence ahead of annual rises in April.

(Photo: Pexels)(Photo: Pexels)
(Photo: Pexels) | Pexels

But although inflation-linked increases are banned, providers can still implement fixed annual mid-contract price hikes.

Last April many deals rose by 7.7%, in line with the Consumer Price Index announced in February as 4% plus an additional 3.9%. Other deals rose by up to 8.8% in line with the Retail Price Index, which was 4.9%, plus 3.9%.

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Ofcom said: “As we have seen in recent years, inflation can be incredibly volatile and is difficult to predict. Our rules will protect consumers from bearing that risk, and ensure providers are clear about prices customers are obliged to pay over the whole contract period.”

What the rule changes mean for you

Transparent pricing: Providers must now display any future price increases clearly and prominently in pounds and pence at the time of sale. This ensures customers can accurately understand and plan for their costs.

No more inflation-linked hikes: Price rises can no longer be tied to unpredictable future inflation rates, which previously made it difficult for customers to estimate their bills.

Simpler comparisons: The new rules make it easier to compare deals from different providers when shopping for a new contract.

Fixed annual increases still allowed: While inflation-linked increases are banned, providers can still apply fixed annual mid-contract price hikes, which must also be stated clearly upfront.

Flexibility to exit contracts: If a contract allows for unspecified price increases, providers must give customers 30 days' notice of any hike and allow them to exit the contract without penalty.

Budgeting confidence: Customers will have greater confidence in managing their household budgets, with fewer surprises and clearer information about costs.

Any price increases included in a contract must now be stated transparently, along with the timing of such changes. Natalie Black, Ofcom’s group director for networks and communications, said: “More than ever, households want and need to plan their budgets.

“Our new rules mean there will be no nasty surprises, and customers will know how much they will be paying and when, through clear labelling.”

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Several providers offer contracts that do not contain price rises, while others offer deals that allow for unspecified price rises during the contract period. If they do this, they must give customers 30 days’ notice and the right to exit penalty-free, so consumers can avoid the increase.

What do you think of these new rules? Will clearer pricing make a difference to your budgeting, or do you think more needs to be done to protect customers? Share your thoughts and experiences in the comments section.

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