Labour has called on the advertising watchdog to fast-track new rules to protect consumers from misleading marketing that could encourage them sign up to mobile and broadband deals this Christmas that will cost them hundreds of pounds more than they expected.
The call follows the closure of a consultation by the Committees of Advertising Practice (Cap) – which writes the codes that all UK advertisers have to follow when running ads in any media – investigating whether telecoms companies are clearly telling consumers about looming price rises in their campaigns.
Telecoms companies make billions of pounds annually by instituting price rises to mobile and broadband bills midway through contract periods, but this is not always made clear when customers sign up for deals.
Companies including BT and Vodafone have said they will continue to use a mechanism to raise prices annually by the rate of inflation as measured by the consumer prices index (CPI) in January, plus 3.9%.
With inflation currently running at a 41-year high of 11.1% this means that customers signing up for a new two-year contract offered in some deals currently available over the Christmas period could find themselves paying up to £240 more than they thought.
“Proposals to make telecoms pricing more transparent and easily understood are essential,” said Lucy Powell, Labour’s shadow culture secretary. “As inflation surges and families are put under more and more pressure, it’s vital that urgent measures are taken to protect consumers from mid contract price rises they did not expect and can ill afford.
“The advertising authorities should expedite action before Christmas, so consumers aren’t caught unawares.”
Telecoms regulator Ofcom – which has said a record 8m households have experienced difficulty paying their bills – has told internet companies to “think hard” about continuing to make large hikes.
On Thursday Ofcom launched its own investigation into the sales practices used in the UK telecoms market – which is dominated by BT, EE, Virgin Media O2, Sky, Vodafone, Three and TalkTalk – after complaints that customers were not told about mid-contract price rises when they signed up.
The consultation by Cap is looking at issues including telecoms operators not explaining terminology relating to rises such as the retail prices index and CPI – two different measures of the rate of inflation – and not clearly telling consumers that introductory prices will not be the amount they will pay by the end of their contracts.
Other issues include promoting deals just before annual price increases are introduced each April, so consumers only get an offer for a very limited time.
It can take an extended period of time for a Cap consultation to ultimately be translated into new rules being introduced into the UK advertising code – and new guidance issued to telecoms companies – which is enforced by the Advertising Standards Authority (ASA).
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Broadband company Hyperoptic has written to the chief executives of the ASA and Ofcom, as well as the head of Cap and the culture secretary, to urge them to use “emergency interim measures” to formally implement new guidance on the marketing and advertising of mid-contract price rises.
“The Christmas and New Year sales period is a popular time of year for the sale of broadband products, with advertisers focusing heavily on ‘deals’, appealing to the need to save money,” says Dana Tobak, the chief executive of Hyperoptic, in the letter. “Yet for operators that use price rise clauses, the prices advertised will only be applicable for a very short time before the April 2023 price rises. Real consumer harm is being done by the practice of mid-contract price rises.”
Labour has said that if it is elected there will be a crackdown on mid-contract price increases, pointing out that broadband and mobile are the only utility sectors in which they are allowed.
In sectors such as energy and gas suppliers cannot increase prices mid-contract unless there is a change in VAT rates.
