Broadband, phone and TV companies will legally have to tell customers about the best value offers when their contracts end, under new rules that will kick in next year.
TV and telecoms giants will have to warn users when their plans are expiring - and show them the best deals available, Ofcom said.
The changes - which will be introduced on 15 February 2020 - are part of an overhaul of the system to enable customers to take advantage of better choice in broadband, phone and TV, and get the best deals for their needs. This could be by switching provider or agreeing a new deal with their existing one.
The regulator said more than 20 million customers have passed their initial contract period - and are at risk of being hit by the so-called Millions overpaying on broadband by £220 a year - and this is the worst provider.
People who bundle their landline and broadband services together pay, on average, around 20% more when they are ‘out of contract’. This rises to 26% among customers who bundle their pay-TV with these two services.
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Around one in seven customers don’t know whether they are still tied to their original deal; and around one in eight believe they are ‘in contract’, but don’t know when this period ends.
Under the new rules, telecoms and pay-TV companies will have to warn customers between 10 and 40 days before their contract comes to an end.
These alerts will be sent by text, email or letter and will include:
- The contract end date
- The price paid before this date
- Any changes to the service and price paid at the end of this period
- Information about any notice period required to terminate the contract
- The best deals offered by their provider, including telling loyal customers what prices are available to new customers.
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People who choose to stay with their provider without signing up to a new contract will be sent a reminder every year about their firm’s best deals.
Lindsey Fussell, Ofcom’s Consumer Group Director, said: “We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it.
“This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.”
The changes will involve providers sending personalised and tailored information to millions of individual customers - with the rules set to be enforced on 15 February 2020.
Richard Neudegg, head of regulation at uSwitch.com, welcomed the rules which follow a raft of energy and insurance contract changes.
"The aggregate cost of out-of-contract charges to telecoms consumers is £41 a second. This is why time is of the essence - everyday spent waiting for these notifications to be rolled out, another £3.5 million is overspent on these services - meaning that more than £350 million has already been wasted since the consultation closed in February.
“It is worth pointing out that consumers should be wary of the ‘best tariffs’ outlined by their providers in these notifications as they will not necessarily be the cheapest or most suitable deals in the market. For an accurate picture of better offers available, as ever, consumers as advised to shop around."
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