Martin Lewis: The Telecoms Consumer Charter “still frustratingly leaves two glaring gaps in Ofcom’s flaccid rules unaddressed”

Today, the Government have announced a new Telecoms Consumer Charter, under which major broadband and mobile providers pledge to stop unexpected bill increases through clearer pricing at the point customers sign up and improved access to social tariffs for vulnerable consumers.

Martin Lewis, founder of MoneySavingExpert.com, who prompted the Government to investigate the sector’s problems by writing to the Chancellor over O2’s “price hike on a price hike”, said:

“I am cautiously optimistic that the 'Telecoms Consumer Charter' is an improvement within the narrow range of issues it addresses. It should mean more people are aware of social tariffs, and we are less likely to see a repeat of O2’s ‘price hike on a price hike’, where customers were told at sign-up how much prices would rise by mid-contract, only to be told later they would by hiked even more. That ran roughshod over Ofcom’s supposed protections.Yet the Charter still frustratingly leaves two glaring gaps in Ofcom’s flaccid rules unaddressed. Both effectively embed above-inflation mid-contract price hikes into the mobile and broadband system – the very mischief the reforms were meant to fix.

1. Transparency doesn’t stop price rises. Firms that follow the rules now simply have to tell customers, in pounds and pence, how much prices will rise by mid-contract. While that improves clarity, it does nothing to limit the size of the increase. In many cases, customers have seen bigger rises under this system than under the old inflation-linked model.

2. ‘Variable pricing’ remains a loophole. Sky continues to operate using a variable pricing structure, meaning customers can face mid-contract price changes, albeit with the right to leave within 30 days of notification. Yet in practice, many people only notice the increase once it hits their bill, not when the notification arrives – making that protection far less effective than it appears.

A simple fix… I don’t understand why we don’t grasp what is by far the simplest and most effective solution: ban firms from increasing prices above inflation during a fixed-term contract. Do that, and the job’s done.”

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