Citizens Advice response to the Consultation on Prohibiting inflation-linked price rises
Citizens Advice response to the Consultation on Prohibiting inflation-linked price rises 167 KB
We’ve been raising alarm bells on price hikes in telco for the past 18 months - highlighting the impacts of egregious pricing practices in telco on consumers’ ability to plan, budget, and understand what they’ll be paying in a cost of living crisis. Our recent report Dialling Up Prices demonstrated the harm accrued by different telco pricing practices - and made the case that, when Ofcom conclude their review into inflation-linked in-contract price rises, they should be looking to both ban this practice and take action on different kinds of price hikes to create a fairer market and promote more effect overall price competition.
Our response to this consultation draws on insights from Citizens Advice advisers as well as independent commissioned research. and we’re pleased to see the proposal to ban inflation-linked price variation terms in minimum-term contracts.
While we agree that the proposal to ban inflation-linked price hikes is a necessary step, we do not see it alone as being sufficient to address the harm we see around in-contract price rises. The use of inflation-linked terms is harmful as they’re impossible for consumers to predict - however, these proposals don’t address other types of price increases which are also impossible for consumers to predict, nor does the proposal tackle broader but well-known and related issues in the market. We conclude that the proposal as set out in the consultation is too narrow and represents a huge potential missed opportunity.
In our response, we highlight three areas of concern within the market that should be tackled alongside inflation-linked price hikes:
Discretionary price rises, and the risk of providers turning to these egregious pricing practices in response to the proposed changes
The lack of action to protect out-of-contract customers
How the supposed protections in place for consumers in both - i.e. being able to “switch” contracts - are insufficient to protect them from harm
Being connected matters now more than ever. Broadband is an essential service - being used by over 63 million people in the UK alone - so we need robust protections that make simple contracts that can work for a broad retail market. Instead, consumers are getting a raw deal across the board with telco pricing, facing a range of difficulties, most of which these proposed changes fail to address.