Mobile users win penalty-free switch from Ofcom

There has been some anger from customers about being tied into contracts when prices rise

Mobile phone customers will be able to leave their contracts mid-term without paying a penalty if their provider puts up prices, the regulator has confirmed.

Ofcom said that customers must be given 30 days' notice of any price rise in their monthly subscription - even if it is within the level of inflation.

A provider must then allow a customer to exit their contract without a penalty.

Mid-term price rises are allowed, but must be made clear to consumers.

Favouring providers

There are no specific changes to the rules, but the way they were interpreted has differed among providers.

The regulator decided to offer guidance to providers to make it clear exactly how they should behave, and encourage competition.

This will take effect in three months' time and will apply to any new mobile, landline and broadband contracts, including some bundled contracts, entered into from that point in time.

"Ofcom is today making clear that consumers entering into fixed-term telecoms contracts must get a fairer deal," said Claudio Pollack, Ofcom's consumer group director.

"We think the sector rules were operating unfairly in the provider's favour, with consumers having little choice but to accept price increases or pay to exit their contract.

"We are making it clear that any increase to the monthly subscription price should trigger a consumer's right to leave their contract - without penalty."

The consumer group Which? has campaigned for clarity from the regulator.

"Consumers told us price hikes on fixed contracts were unfair, and now people will be able to leave these contracts and switch to a cheaper provider without being hit by extortionate exit fees," said Richard Lloyd, executive director at Which?.

Ernest Doku, of price comparison website Uswitch, which could benefit from consumers shopping around for deals, said: "Hopefully it will make providers think twice about increasing prices - they won't want to lose customers two months into a 24-month contract.

"But even if this move does not stop prices going up, at least consumers will be able to vote with their feet and say no to higher bills by moving to a new deal."