UK consumers and small businesses will be allowed to exit their mobile, landline and broadband contracts without paying a penalty fee if their service provider increases its prices mid-contract.
Regulator Ofcom has introduced rules to ensure that, starting Thursday, customers entering new contracts will have to be notified of any price increase to what was agreed at the point of sale, at least one month in advance. In such instances, customers will be allowed to leave their provider without having to pay cancellation charges.
Failure by service providers to comply to the legislation could result in a fine of up to ten per cent of its annual turnover, Ofcom said.
The ruling follows a UK review into contract pricing terms. It found that consumers were often unaware that their monthly subscription fees had been increased, since they were under the impression that they were fixed price contracts.
The regulator added that service providers must communicate price changes to their customers “clearly and transparently”.
In order to ensure that the change in policy is implemented by service providers, Ofcom said it will closely monitor complaints and conduct research, such as mystery shopping, to monitor the service provider’s communication of contract terms at the point of sale.
