Customers must be told when phone deals end

BROADBAND, phone and TV firms must tell customers when their contract ends and direct them to the best deals available, the communications watchdog said yesterday.

Under rules announced by Ofcom, providers must send a text, email or letter between ten and 40 days before their contract ends.

They come after concerns that the companies are saving the best tariffs for new customers, and leaving loyal users on the most costly rates.

This ‘loyalty penalty’ costs households £4billion a year on everything from insurance, home loans and savings to broadband and mobile phone services.

More than 20million customers are currently out of contract and many are paying more than they need to, Ofcom says.

But from February 15 next year internet, TV and mobile and landline phone providers will have to contact customers with information about their contracts, such as the end date and current cost, changes to the service and the termination notice period.

The companies must also highlight the best tariffs available and include the prices offered to new customers.

Those who choose to stay with their provider without signing a new contract will be notified of the firm’s best deals every year. Ofcom’s consumer group director, Lindsey Fussell, 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 are paying more than necessary when they’re no longer tied to a contract.’

The cost of landline and broadband packages typically increases by 20 per cent when a deal ends. Families who also pay for TV services as part of the bundle are charged 26 per cent more when out of contract.

Experts say the practice of rolling households onto more expensive packages without telling them is ‘ inexcusable’ and has been going on for too long. They accuse firms of exploiting busy families who may not know when their contract ends.

According to Ofcom, around one in seven customers do not know whether they are still tied to their original deal.

Citizens Advice has said the penalty on broadband services costs families £113 for every year that they stay with a supplier after their initial contract period ends.

It says this is typically 43 per cent higher than bills paid by new customers. It also estimates that the penalty on mobile phone contracts is £264, based on millions continuing to pay a high monthly charge even after paying off handset costs.