In a bid to break the “loyalty penalties” consumers face on some of their bills, broadband, phone, and television providers will, in future, have to inform customers when their contract is ending and show them the best deals that are available.
The regulator Ofcom said that the changes to the rules are part of its “Fairness for customers” program. It’s estimated that up to 20 million consumers could benefit from getting a better deal when it comes into effect.
At the moment, when people stay with the same provider, they often lose out financially. And when people buy bundle deals that include different services, they’re likely to pay even more than those who don’t.
Under the new rules, service providers will be required to send out tailor-made information to customers, which will include:
- The date their contract ends
- How much they are paying in the contract
- How much they will be paying when the contract is over
- Details of the best deals available from the provider
This change will come into effect next year, in order to give the providers enough time to make changes to their current systems and processes.
According to Citizens Advice chief executive, Gillian Guy: “We are encouraged that Ofcom will make companies send a reminder to their customers when their contract is about to end. But, given the scale of the loyalty penalty, this won’t be enough to solve the problem.”
“The Competition and Markets Authority was clear in its response to our super-complaint that regulators must report on their progress by June. We look forward to hearing about the concrete actions Ofcom will take to end this systematic scam.”
Natalie Hitchins, who is head of home products and services at Which? said: “Until now many customers have found themselves paying over the odds for staying with their provider after their initial contract has ended – so notifying people in advance that they may be about to be hit by these poor-value rolling tariffs is a step in the right direction. Providers should be fighting hard to show that they deserve to hold on to their customers, not hitting them with an unexpected price hike the minute their contract is up.”