Telecoms| UK Regulatory Outlook July 2023

CAP publishes new guidance on mid-contract price increases

The Committee of Advertising Practices (CAP) and the Broadcast Committee of Advertising Practices (BCAP) have published new guidance to help protect consumers against misleading advertising of mobile and broadband mid-contract price rises.

The new guidance notes that ads are less likely to mislead consumers when: 

• they do not suggest that a price will apply for the full minimum term of the contract, if that is not the case – for example, claims such as “fixed for X months” are unlikely to be acceptable if the price is due to rise;
• price claims are qualified with information alerting consumers to the possibility of a mid-contract price increase – in an equally prominent manner;
• the details of what the increase will be based on are featured prominently relative to the price; 
• the language used to describe the inflation increase is presented in a way that is clear and simple to understand;
• they include the full amount the consumer will pay after the increase, once the relevant inflation rate is known; and
• they make clear where terminating a variable contract due to a price increase will impact other linked services.  

It is common for mobile and broadband providers to include clauses in their contracts which allow them to increase monthly costs on an annual basis  – usually based on inflation, for example, the consumer prices index (CPI) or retail price index (RPI). The initial price a consumer pays is destined to go up in the future but the amount is generally unknown. It is therefore vital that ads clearly inform consumers of these future price increase.

The Advertising Standards Authority will assess the compliance of each ad on a case-by-case basis, taking into account the content of the ad and its likely audience. The guidance is due to take effect from 15 December 2023, so advertisers will have a short grace period to allow them to make any changes to their advertising campaigns.

Ofcom's bid to support phone and broadband customers through the cost of living crisis

Ofcom has provided an update on its cost of living action plan which describes a range of work the regulator is undertaking to support households.

The update also includes a call on major telecoms providers to provide broadband and mobile social tariffs. Ofcom monitors pricing trends and notes that it will continue to shine a light on providers who do not promote social tariffs strongly enough to eligible customers.

The regulator has also issued a timely reminder about the clear rules in the General Conditions which govern transparency about the terms and conditions in consumer contracts, having cited that the fair treatment of customers is critical when household finances are under pressure.

Ofcom has a number of investigations and enforcement programmes in place, showing that fair treatment of customers and transparency are high up on the priority list for the regulator, and providers will need to take considerable care so as not to fall foul of the rules.

In August, Ofcom will publish its next update to its Communications Affordability Tracker, which monitors customers' experiences of communications services. By October, Ofcom will complete its enforcement programme which looks at whether the largest providers in the market have complied with the rules on how in-contract price rises should be made clear and transparent. The increased activity from Ofcom in this area indicates that providers should continue to stay abreast of any updates in guidance published by the regulator.