Ofcom bans phone and broadband rollover contracts
Tuesday, 13 September 2011 01:03
Rollover contracts, which tie landline and broadband customers into repeated minimum contract periods unless they opt out, will be banned from December this year, regulator Ofcom has confirmed.
The ban will apply from December 31st on these deals, also known as Automatically Renewable Contracts (ARCs), for residential and small business landline and broadband services.
BT is the largest provider currently offering ARCs and the watchdog estimates that 15 per cent of UK residential consumers are on them.
Ofcom chief executive Ed Richards said these rollover contracts raise barriers to competition by locking people into long term deals with little additional benefit and make it harder for them to switch to better tariffs.
Michael Phillips, product director at Homephonechoices.co.uk said the move is great news for consumers.
"Automatic renewal was locking some consumers into services that were no longer suitable for their requirements and were often less competitively priced than newer offerings," he remarked. "The ban recognises this and recognises that consumers should be empowered to regularly compare prices and packages and choose to remain with a provider if it suits them, rather than being forced to do so."
Consumer Focus director of external affairs Adam Scorer agreed, describing the ban as "extremely welcome"
He continued: "Rollover contracts can be confusing and penalise customers. Many people have been unknowingly rolled over into another contract. This has left them unfairly tied into a contract which they had to pay a penalty fee to escape."
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