Millions of households in the middle of broadband and phone contracts will face inflation-busting price hikes next year of more than eight per cent.
This is despite the fact that regulator Ofcom has launched a probe into whether such mid-contract price rises can still be justified.
Wealth & Personal Finance can reveal that Ofcom will be unable to stop next year’s increases because its investigations – launched five months ago – will not be completed in time.
Broadband bills: Ofcom will be unable to stop next year’s hikes because its probes will not be completed in time
Ofcom says it is still ‘consulting’ on the issue. It means customers will face a second year of stiff price increases.
In April, providers imposed mid-contract increases of between 13 and 14 per cent. Some – applied by BT, EE, Plusnet, TalkTalk, Three, O2, Virgin Media and Vodafone – meant households paying £100 more than last year.
Wealth & Personal Finance had already urged Ofcom to ban mid-contract price hikes on fairness grounds, because customers who sign up for a deal have no idea what they will be paying by the end of their contract.
At the time, Ofcom said it would look into the issue, but was powerless to stop the price hikes. Now, we can reveal that Ofcom will also be unable to stop stiff price increases next April.
Most providers have written into the small print of customers’ contracts that they will increase bills every April by the rate of inflation plus up to 3.9 percentage points. The figure used is based on the rate in December or January.
Inflation is forecast to be around 4.7 per cent next January, so providers could increase bills by this amount plus 3.9 percentage points – to a total above eight per cent.
Dame Melanie Dawes, Ofcom chief executive, told Wealth: ‘We won’t be able to change the rules in time for that [the April price rises], but this is why alongside looking at whether or not to take full regulatory action we’re also bringing this [issue] up with the providers all the time.’
She also said that Ofcom is looking into whether the industry is adhering to current rules – and whether they need to be tightened up.
