Mid-Contract Price Rises in 2024

Mid-Contract Price Rises in 2024

In October 2024, the UK Advertising Standards Authority (ASA) took a significant step in protecting consumers by cracking down on misleading broadband price advertisements. Major telecom companies such as BT, EE, Plusnet, TalkTalk, O2, and Virgin Media were found to have violated new guidance in the UK advertising code, which aims to make price increases clearer to consumers, especially when those rises occur mid-contract.

What Are Mid-Contract Price Rises?

Many broadband and mobile providers include clauses in their contracts that allow them to increase prices during the contract term. Historically, these price hikes have been tied to inflation rates, such as the Consumer Price Index (CPI) or Retail Price Index (RPI), plus an additional amount (usually around 3%). This practice started around 2021, when inflation was relatively low. However, the cost of living crisis that followed, with inflation surging to a 41-year high in 2022, led to significant price increases for consumers, who often were not fully aware of this aspect of their contracts when signing up.

In April 2024, many providers raised their prices once again, with Virgin Media‘s increase reaching as high as 8.8%. For customers locked into contracts, these hikes came as an unwelcome surprise, especially during a time when household budgets were already stretched thin due to the broader economic conditions.

Why Did the ASA Crack Down on Price Rises?

The ASA‘s October 2024 rulings specifically targeted the lack of transparency surrounding these mid-contract price rises. The watchdog found that ads by major telecom companies did not give sufficient prominence to information about these increases, which meant that consumers could be easily misled when making their purchase decisions.

The new advertising rules, implemented in December 2023, require telecom companies to make information about price rises “clear and prominent,” ensuring that any future increases are presented in a way that consumers can easily understand. This includes the need to display the full future price in pounds and pence rather than burying the details in fine print or requiring customers to click through multiple layers of links.

The ASA‘s findings prompted it to order that the offending ads be removed and called on the companies involved to update their marketing practices. Notably, the companies have been instructed to avoid tactics like using asterisks or deep links to obscure critical information about future price hikes.

How Do Mid-Contract Price Rises Impact Consumers?

Mid-contract price increases have become a major source of frustration for consumers, particularly in the broadband sector. Research estimates that these price rises will generate an additional £488 million in revenue for telecom firms in 2024 alone.

One of the primary complaints about mid-contract price rises is the lack of flexibility for consumers. Exiting a contract early to avoid price hikes often incurs hefty exit fees, trapping many customers into deals they would otherwise leave.

However, there is some positive news on the horizon. From 2025, Ofcom, the UK’s communications regulator, is set to implement new rules banning broadband providers from linking price hikes to inflation. Instead, providers will need to offer clearer and more predictable annual price increases at the point of contract signing. This change is expected to provide greater transparency and allow consumers to make more informed decisions about their broadband contracts.

What Can Consumers Do About Mid-Contract Price Increases?

If you’re currently locked into a broadband contract and worried about mid-contract price rises, it’s essential to:

• Check Your Contract Terms: Understand whether your provider has included clauses about price increases and how those might impact your bill.
• Monitor Price Increases: Keep an eye on inflation rates, particularly around the time when telecom companies traditionally raise their prices (usually around April).
• Consider Early Termination Fees: If the price increase is significant and you’re considering leaving your contract, calculate whether paying an exit fee might be more cost-effective than staying locked into a contract with rising costs.
• Compare Providers: With new rules coming into effect, some providers may offer better pricing structures. It’s worth shopping around to find a deal that provides clearer terms and more predictable costs.

What Does the Future Hold for Mid-Contract Price Rises?

As telecom companies respond to the ASA‘s rulings, consumers can expect to see clearer, more upfront pricing information in broadband ads. This increased transparency should help reduce confusion and give customers a better understanding of the financial commitment they are making when signing up for broadband services.

The changes will also help level the playing field for consumers who have long struggled to understand how price increases would affect their bills. In an era of increasing digital reliance, clear communication from broadband providers is more important than ever, and the ASA‘s crackdown marks a step forward in ensuring fairer treatment for UK customers.

As we head into 2025, with new regulations on the horizon, consumers can look forward to more predictable pricing in their broadband contracts—without the hidden surprises that have been all too common in recent years.

Sources:

• The Guardian
• The Independent
• Uswitch