Providers now have to tell you when contracts are ending so you can shop around for a better deal
Thursday 20 Feb 2020 Author: Laura Suter

It is easier for anyone with a broadband, TV, landline or mobile phone to find out when their monthly costs are about to be hiked thanks to changes that came on 14 February.

New rules from the regulator, Ofcom, mean that your provider now has to warn you when you’re current contract is ending, which is usually when prices are hiked. The move is expected to alert more than 20m people to the fact that they are out of contract and paying above the odds.

WHY ARE THE CHANGES HAPPENING?

The new plans from Ofcom are trying to tackle the so-called ‘loyalty penalty’ whereby existing customers whose contracts have ended pay far more than new customers, who can access cheaper introductory deals. This happens in lots of other markets too, from mortgages and insurance to energy bills.

As part of the changes, broadband, TV, landline or mobile phone providers will have to contact you between 10 and 40 days before your contract comes to an end, reminding you that the date is coming up.

They will also highlight any price changes that will happen after that date – which is usually a hike in the price – and they will have to tell you about any deals that you could get if you switched to another contract with them. If you don’t decide to switch, then you’ll get a reminder every year with the same information.

Some people will choose to ignore these reminders, thinking it’s too much hassle to worry about switching, or that they can’t save enough money to make it worthwhile. But for others it will be the prompt they need to switch and save.

HOW MUCH COULD YOU SAVE?

The number of people who are out of contract is huge, with 40% of people with a combined phone and broadband service, or combined phone, broadband and TV service out of contract, and almost 90% of those with a landline-only service are out of contract.

Ofcom estimates that customers who are out of contract on their broadband service could save £100 a year by switching.

Most people can reduce their costs quite easily if they call their current provider and haggle on the price. They’ll usually be able to get the same package for a cheaper deal, or pay the same and get a better package or faster internet, for example. This is the lowest-hassle move, as it doesn’t require you to switch providers or hunt around for a better deal.

However, you can save even more if you shop around other providers and switch. There are lots of price comparison websites that allow you to compare costs and see if you could get the same package for a lower price. And even a £10 saving a month adds up over the year.

If you sign up to a new deal you will often have to enter a new contract, which usually means committing to another year or even two years with that provider. So if you know that you want to cancel soon or switch to a new provider in the near future, you can stick on the current rate – just make sure you remember to switch when you planned to.


HOW HAVE PROVIDERS RESPONDED?

As part of a separate bit of work from Ofcom, some broadband providers have pledged to restrict the increases to your monthly bill once you’re out of contract.

For example, Sky has pledged that out of contract customers will only pay up to £5 a month more than in-contract customers.

BT has pledged to cap the difference too, at £8, and says it will let those customers who are out of contract access the same deals as new customers. It has made an extra pledge that people who can’t access superfast broadband will not pay more than those are on superfast deals.


 

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