Communications regulator Ofcom has announced a probe into the transparency of price rises built into phone and broadband contracts.
The UK regulator said its industry-wide enforcement programme will look at whether in-contract price increases were set out clearly enough by phone and broadband companies before customers signed up.
The scrutiny follows concerns that consumers who took out contracts between 1 March 2021 and 16 June 2022 may not have been provided with sufficiently clear information about in-contract price rises, which are usually applied in March or April each year, Ofcom said.
The regulator’s rules for that period stipulate that if a provider included potential future price rises in the terms of a contract, they had to be “set out prominently and transparently”.
If the customer had not agreed to those terms when signing up – because they had not been made sufficiently clear – providers should have notified them of the price increase and offered them a right to exit penalty-free.
Ofcom said it will now investigate if the rules were followed, adding that it will collect further information from a range of providers to assess the steps they have taken to make their terms prominent and transparent.
If it uncovers issues with providers complying with the rules, it may launch separate investigations into individual companies.
"As millions of people are having to deal with rising household bills, it is more important than ever that telecoms companies don’t shirk their responsibilities and keep customers fully informed about what they are signing up to,” said Lindsey Fussell, Ofcom's Networks and Communications group director in a statement.
“It’s vital that people are told clearly upfront about any future price rises they will face while they are in contract, and we’re investigating to check whether this happened in practice."
With inflation at its highest level for 40 years, some phone and broadband customers have seen substantial price hikes this year.
Ofcom said its latest affordability of communications services tracker, published today, revealed that 9.1mln UK households are having problems paying for their phone, broadband, pay-TV and streaming bills, more than double the level of April 2021.
It said 17% of households are cutting back on other spending, such as food and clothing, to afford their communications services, up from 4% in June last year, the study showed.