We've written before about the clauses in broadband and mobile contracts which say things like:

“The plan price will be increased on or after 1st March every year from March 2023 by the Consumer Price Index rate of inflation published in January of that year plus 3.9%.”

Such clauses have been on the radar of both Ofcom, which is currently investigating them, and CAP and BCAP, which consulted on guidance to deal with advertising telecoms contracts. CAP and BCAP have now published the final guidance, which will take effect from 15 December 2023 to give advertisers a chance to update their materials.

Many providers include these clauses in their contracts.  It means that consumers’ monthly costs will increase on an annual basis, usually based on inflation plus an additional percentage. So the initial price consumers are paying will go up in future by an unknown amount – sometimes only a few months from when they take out the contract, depending on the time of year – and often more than once. CAP and BCAP say that it is therefore crucial that information about the future price increase is clear to consumers in the ad itself, to avoid creating a misleading impression that the initial stated price will remain the same throughout the contract period. 

Ofcom rules require that certain material information must be provided to consumers, in a specified format, before they can agree to enter into a contract for phone or broadband services. However, a transactional decision is not limited to the decision to make a final purchase but could also include a decision to enquire further in response to advertising. Therefore, such information should be sufficiently clear and prominent in the ad itself, regardless of the specific, detailed information that is required to be given to the consumer at a later stage of the purchase process.

The new guidance includes a number of principles to help advertisers ensure that their advertising is not misleading. Ads are more likely to be compliant where:

  • They do not state or imply that a price will apply for the full minimum term of the contract, if that is not the case – for example, claims such as “£X for X months” or “fixed for X months” are unlikely to be acceptable if the price is due to rise and any subsequent qualifying information is likely to contradict rather than clarify the claim;
  • Price claims are qualified with equally prominent information alerting consumers to the presence or possibility of a mid-contract price increase;
  • The details of what the increase will be based on are featured prominently relative to the price;
  • Inflation terminology 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 rate is known;
  • They take into account the time of year the ad is published relative to the timing of any price increase (usually in April) – for example, an ad is less likely to mislead if the monthly price stated in the ad will be charged at least once before the increase takes effect; and
  • They make clear that terminating a variable contract due to a price increase will affect other linked services (e.g. they may lose that linked service or incur a charge or other rice increase). 

CAP and BCAP consider that by conforming with the principles outlined, marketers are less likely to be in breach of the rules and that approaches where the information about mid-contract price information is not in line with these principles carry a greater risk of breaching the rules.