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Ofcom to help people escape contract price hikes

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Ofcom has proposed new measures allowing it to "intervene" to allow customers to break their landline, broadband and mobile contracts early without penalty if their provider increases prices.

The media regulator wants to create greater protection for consumers from price increases during fixed contracts for communications services.



Customers have complained to Ofcom that it is unfair for providers to increase prices when they have "little choice but to accept the increase or pay a penalty to exit the contract".

For example, someone may sign up to a pay-TV service on a 12-month contract, but if their provider decides to increase prices after six months, they have no choice but to accept the rise or pay a penalty to break the deal.

Ofcom has launched a consultation on a range of measures to tackle the issue, including an expectation on providers to be clear and upfront on price increases, as well as enable consumers to more easily cancel their contracts if they are unhappy.

But Ofcom has also proposed that in certain cases it should be allowed to "intervene" to help the customer to exit their contract without a penalty.

Under the proposals, providers would still be allowed to increase prices during fixed-term contracts - as to ban this would be inconsistent with the European legal framework - but they would have to enable the customers to leave for free if they did not want to accept the increase.

"Many consumers have complained to us that they are not made aware of the potential for price rises in what they believe to be fixed contracts," said Claudio Pollack, the director of Ofcom's consumer group.

"Ofcom is consulting on rules that we propose would give consumers a fair deal in relation to mid-contract price rises."

The regulator is now inviting people to submit their views on the proposals in a consultation that runs until March 14, 2013. Ofcom will publish its decision by June.

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