Telecoms regulator Ofcom is consulting on plans to force network providers to notify customers reaching the ends of their phone and broadband contracts.
Recent data show that millions of consumers currently end up over-paying for services after their initial contracts which have run their course, when instead they could be switched to cheaper tariffs.
The announcement has come about as a result of Ofcom looking into ways to improve the UK telecoms market through upping consumer engagement, making customers more likely to shop around. Research conducted by the watchdog revealed that many people would like additional clarity over whether they are currently within a phone or broadband contract period, and when these contracts are slated to end.
In response to this, Ofcom announced a phased approach to improving engagement, beginning with looking at introducing end of contract notifications for customers.
Ofcom outlined their plans in a statement:
“In the first phase of our work to increase consumer engagement, we are focusing on ‘end of contract notifications’ – whereby providers would proactively inform customers when they are approaching or are at the end of their minimum contractual term. We aim to consult on proposals in July 2018. This will be followed by a second phase of work, which will consider other reasons why some consumers may find it difficult to shop around – such as understanding their usage requirements, or navigating the range and complexity of deals and packages available – and potential ways to address these.”
Currently it is not mandatory for providers to inform customers that their contracts are up to allow them to find cheaper deals. Data collected by Ofcom shows that, as a result of this, more than 6 million mobile phone contract holders are being charged for mobile phone handsets which they have already paid for, and could instead switch to cheaper contracts just paying for texts, calls and data.
Ofcom found that the average consumer overpays by £22 per month for handsets which have already been paid off, whilst those who have already paid off a smartphone can be paying £38 a month extra if they don’t change their contracts after doing so.
Likewise broadband providers have been found to move existing customers onto more expensive tariffs once their contracts expire. It is estimated that around 33% of all broadband customers – amounting to 15 million households – are currently overpaying for their broadband because they are out of contract and have been placed on a higher tariff by their provider as a result.
Matt Hancock, the Minister for Digital Culture, Media and Sport led calls for a change in the industry back in October, saying that “it’s only right that mobile customers should be notified when they have paid off the price of their handset, and that their future bills should reflect this.”