Price Rises in Fixed Term Contracts
28 March 2013
Earlier this month the Panel responded to Ofcom’s consultation on whether consumers need additional protection from price rises in fixed term contracts for landline, broadband and mobile services. The Panel considers that the current provisions in GC9.6 are insufficient to protect the consumer from the harm of mid-contract price rises. In January 2012, the Panel expressed its view that price increases within the life of a fixed-term contract could be seen as ‘sharp practice’ and that, although such increases were commercial decisions for the operators, it considered that price changes within the life of a fixed term contract would be contrary to the expectations of most consumers.
The Panel explained that it is intrinsically unfair if one of the most fundamental parts of a contract, that is the cost of the provided service, is subject to change at the behest of one party. The Panel accepts that the costs associated with providing a service can increase during the term of that contract. However, given the information asymmetry in the relationship between the communications provider and the consumer, what the Panel does not accept is that this increase in costs should be passed on to the fixed-term contract consumer, without the consumer having any right to leave the contract without penalty. You can read our response here (PDF 115KB, opens in a new window).