Science and Tech Secretary Liz Kendall is pushing for further regulation and transparency around mobile phone contracts in the UK.
In a letter sent to regulator Ofcom, Kendall said that driving down inflationary costs and protecting consumers are vitally important for this government.
“As such, I welcome both the action you took in January to increase transparency on how in-contract prices are presented in new contracts, and your statement yesterday expressing disappointment with O2’s price rises. I strongly agree that they are against the spirit of your previous changes on pricing, and all the more disappointing given the current pressures on consumers.
“Nevertheless, I believe we need to go further, faster. I am keen that we look at in-contract price rises again. O2’s recent decision to increase prices above the levels specified in the contract means that, under Ofcom’s rules, its customers can leave free of charge within 30 days.”
Kendall asked if Ofcom would undertake a ‘rapid review’ on how easy it is for customers to switch providers.
Making it easier to switch
If companies are determined to increase pricing, it is incumbent on the regulators to make sure that customers are able to go elsewhere as easily as possible, she said.
“Similarly, I believe that, as with recent changes on electricity bills – which provide for greater transparency about the costs of specific components of those bills – increased transparency in telecoms bills could be a helpful mechanism to drive further clarity on pricing and investment. I would welcome views on how best to achieve that.
“In addition, recognising that there is a decreasing number of people on legacy contracts but in an effort to take all action possible, would you write to telecoms companies to ask them to clearly and urgently communicate to customers with pre-January 2025 contracts, to ensure that those people are appropriately informed of their upcoming price rises.
“I would also welcome your assessment of the impact of the January changes to help us all identify where further transparency measures might be merited.”
Taking a leaf from insurance
“Finally, you will be aware that there have been calls for the sector to have a similar regime to those such as insurance, where new and existing customers need to be offered the same deal,” Kendall said.
“So, for example, when an existing customer looks to renew their contract with their provider, they are provided with the price they would be charged if they were a new customer and have a choice over which deal to take. I understand Ofcom developed a discussion paper on this in 2023, and I would urge you to look at this as soon as possible.”
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