For years phone and broadband suppliers have made extra money when people reach the end of their contracts.
That's because unless you're one of the switched on people who move to a cheap deal the second your contract expires, you're left either paying for a handset you've already paid off or at risk of being hit by price hikes.
Which? research found that two-thirds of broadband deals see customers hit with big price rises when initial contracts end – with some going up by as much as 89%.
And figures from regulator Ofcom show there are 8.8 million broadband customers currently out of contract – meaning almost 6million people are currently paying a higher price than the one they signed up to.
In theory that stops today – with firms now forced to both remind people when their contract is ending as well as letting them know what the cheapest deals they offer from 15 February onwards.
Laura Suter, AJ Bell personal finance analyst, said: “The changes are intended to stop people sleepwalking into paying far higher charges once their broadband, TV, mobile and phone contracts have ended."
The problem is that despite the notifications coming, people will still need to take action themselves – and if they miss the reminder they could have to wait another year before they are reminded again.
Which?'s Natalie Hitchins said: “Anyone who thinks they are out of contract, paying too much or not happy with their current service should not wait until they receive a notification, you might find you save yourself hundreds of pounds a year if you haggle or switch.”
Which? thinks that Ofcom needs to look very closely at how effective the new rules actually prove – given the millions of people already paying extra because their deal has ended.
"If it is not having the effect of encouraging consumers to review their broadband contract and ensure that longstanding customers are not paying too much, the regulator will need to take further action to make sure all customers are being treated fairly when it comes to this essential service," Which? said.
Phone, broadband and pay-TV companies will have to warn customers between 10 and 40 days before their contract comes to an end.
Alerts – sent by text, email or letter – must include:
- when your contract is up;
- what you’ve been paying until now, and what you’ll pay when your contract is up;
- any notice period for leaving your provider; and
- your provider’s best deals, including any prices only available to new customers.
If you're already out of contract, your provider has to remind you, and tell you about their firm’s best deals once a year.
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