In continuation of ongoing work to help consumers get better deals, Ofcom has set out measures to protect vulnerable customers.
Background: This announcement, and the commitments Ofcom has obtained from the industry, comes as a result of a detailed study promised by the regulator back in December 2018. It forms part of Ofcom’s programme of work to ensure fairness for customers.
What is the concern? Having reviewed broadband pricing practices (to determine the best way to help these customers get better deals), Ofcom believe that out of contract customers are paying £8 – £10 more for a service than if were to recontract or switch. Crucially, Ofcom see this ‘loyalty premium’ as the cost of not engaging and calculate an overall harm of between £1bn – £1.1bn (£800-£900 million could be saved by consumers just as a result of engaging more with their current provider and taking a new contract).
What commitments have Ofcom secured? As a result of the review, the UK’s biggest broadband companies have made a range of commitments to protect customers and cut prices for those who are out of contract. These include ensuring existing customers have access to the same deals as new customers, that out-of-contract customers won’t see above-inflation price rises, one-off price reductions and even individual annual reviews with the most vulnerable of customers.
What happens next? If the end of contract notifications don’t work as well as they are expected, Ofcom see these commitments as a sort of backstop which means consumers should be treated fairly. The regulator is still looking to identify any groups that may need extra protection, and have published guidance on how providers should be looking to identify and support them.
