In recent years, many major UK phone, broadband and pay TV companies have changed their contract terms to include price rises that are linked to future inflation rates. This can mean that consumers are uncertain about the prices they will pay.
Ofcom has introduced changes to its General Conditions to require providers, where they apply in-contract price rises, to set these out upfront in pounds and pence, at the point of sale. This means that providers may not include inflation-linked or percentage-based price rise terms in new contracts.
Alongside Ofcom's prohibition on inflation-linked and percentage-based increases in telecoms contracts, CAP and BCAP's amended guidance on the presentation of mid-contract price increases in advertising comes into force on 17 January 2025. It has been updated to reflect Ofcom's new rules.
The guidance already provided that if the amount by which the customer's monthly contract price would increase was known in advance, then it should be stated in full. The proposed amendments clarify that the full future monthly price and when it will rise are likely to constitute material information that the consumer needs to make an informed transactional decision. Because the means to calculate the future price will always be known in advance, percentage-based presentations of the price are unlikely to be sufficient to avoid misleading the consumer.
The prominence principles set out in the guidance remain the same. In summary, ads for telecoms contracts that include (or have the potential to include) a mid-contract price rise are less likely to mislead if information indicating the presence or (in the case of variable contract) possibility of a price rise has equal prominence with the initial price claim; and information on the nature of the price rise (the full future price in pounds and pence) is prominently featured within the main ad copy – no lower than one 'step' below the initial price claim.
Several other changes have been made to remove references to inflation-linked increases that will no longer be relevant and to contextualise the guidance in relation to the Ofcom rule changes.
The guidance refers to the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs). The CPRs will be replaced from April 2025 by the Digital Markets, Competition and Consumer Act 2024. CAP and BCAP are considering the potential impact of the CMA's draft guidance on the unfair commercial practices provisions on drip pricing and will make further changes in due course if necessary.
