Protecting loyal consumers – Ofcom implements major changes
The majority of UK households will have broadband, TV or phone contract packages, if not all three, from one or multiple service providers. Many consumers will at some point have let these contracts roll on after the initial promotional deal has expired. In this scenario, many will stay with the same provider, on the same package but at a much higher rate, rather than negotiating new deals or changing service provider.
It is estimated around 20 million consumer contracts have expired and are now rolling, demanding expensive monthly rates with little to no difference in the communications package supplied.
To protect consumers, the communications regulator Ofcom has implemented some major changes, requiring compliance by service providers from 15 February 2020. These changes will help consumers save money on their broadband, TV and phone contract packages.
Service providers are now required to:
- confirm the contract expiry date and the date the contract can be terminated without penalty;
- specify the price paid;
- clarify any automatic changes to the price or service after the end date;
- provide details about any notice periods to terminate the contract;
- include details of any alternative subscriptions available, including the prices and services available as part of the deals for new clients.
The new rules mean service providers must make this information available, in writing, between 10 and 40 days prior to the consumer’s current communications package coming to an end. Text, email or letter will suffice to meet the “in writing” requirement.
Any consumers who were notified of their options but decided to stay with their current service provider will now also receive annual reminders from their provider of the deals available to them. Hopefully this will encourage consumers to think each year about the amount they are paying and the services received.
The latest intervention by Ofcom encourages consumers to switch communication service providers at the end of their contracts or negotiate new deals. This will, in turn, provide appropriate contract packages, with a financial benefit to the consumer.
What can you look out for?
When entering into a contract it is important to be alert to any automatic variations, particularly after an initial promotional period, where the consumer’s consent to such changes is not required. The new requirements will help with this. The most common variations are usually to the price, any provisions on termination (including penalties), the contract term and the content of the communications package supplied. It is important for the parties to understand their position, their rights and any liabilities they may have pursuant to the terms agreed.
It is easy to accept terms that are assumed to be standard and not always consider what these really mean. We are used to undertaking what we call ‘red flag’ review exercises for our clients to identify key areas within a contract that need careful consideration or negotiation. We always recommend that clients carefully review all of the contract terms they are agreeing to.
If you would like any further advice and guidance on contracts terms, please get in touch with our Commercial & Intellectual Property team or fill in the enquiry form below.