Mobile and broadband ‘loyalty penalties’ endure, but help on the way

Ofcom’s clampdown on communications providers for charging so-called “loyalty penalties” to customers at the end of their contracts is progressing well, according to the UK’s competition regulator.

The Competition and Market Authority (CMA) has published an annual update on Ofcom’s progress in ensuring consumers are made aware that their monthly broadband, landline, smartphone and Pay TV contracts could go up when they reach the end of their initially agreed contract.

The practice, deemed predatory by Ofcom, has resulted in loyal customers significantly overpaying after 12 or 24 month contracts, because promotional periods have ended and they aren’t being made aware of better deals.

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While the CMA says steps are being taken in the right direction, it says only Virgin and Tesco Mobile have “agreed to fully address its concerns about customers still paying a higher rate once handsets are paid off.” Meanwhile, Three Mobile is shirking from making commitments any at all.

The mobile consumer will be boosted by new rules, being introduced next month, which will ensure customers are alerted to an annual best tariff notification, as well as one that comes as the end of their contract.

“This will mean that customers will be told when their contract is coming to an end, and shown the best deals available, including SIM-only deals,” the CMA says in its report (via Gov UK).

Those rules will also be used to assist broadband subscribers in the UK, with the major ISPs voluntarily committing to ensuring potentially vulnerable customers are not being ripped off.

The CMA’s CEO Andrea Coscelli, said: “We’re pleased to see progress has been made in helping to stop people being penalised for their loyalty. But more still needs to be done to make sure that loyal and, in some cases vulnerable, customers are not let down or ripped off. We urge the regulators of the industries under scrutiny to keep up the pace, and we will continue to monitor their progress.”

In a statement, Ofcom said its incoming measure will make a big difference, as it continues its work to ensure everyone gets a fair deal.

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