Martin Lewis has warned of a major broadband and mobile bill shake-up set to come into force from this Friday. Ofcom is banning telecom firms from using mid-contract price rises linked to inflation.
New rules will be introduced on Friday, January 17. It comes after Ofcom previously ruled that linking mid-contract price rises is ‘confusing’ for customers.
This is because you do not know what the level of inflation will be each year. Instead, firms must now outline their increases in ‘pounds and pence’ so customers can see exactly how much they will end up paying.
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Broadband and mobile companies were previously allowed to increase prices mid-contract every April in line with inflation, plus up to 3.9 per cent on top of this. It meant that millions of people were hit by huge bill increases of up to 17.3 per cent in 2023, after inflation surged to a 41-year high that year.
Speaking on his ITV Martin Lewis Money Show Live, Martin explained how this only applies for new contracts and renewing contracts, Mirror reports. He said households could still end up being subject to big future price rises.
Martin said: “It still allows them to do above-inflation increases because as long as they tell you what it is, they can put it up £20, but it is an improvement in terms of transparency.”
He added: “If they don’t tell you the pounds and pence figure, you can leave when they announce a price rise. You can breach your contract, you’ve got 30 days to go. If you do want to leave them, or if you want to haggle to stay, that is your opportunity.”
It comes after consumer experts warned people on cheaper contracts might not be better off under the shake-up. Inflation is now much lower and was sat at 2.6 per cent in November.
Andrew Ferguson, editor of thinkbroadband.com, told The Sun that someone paying £24.99 a month for broadband and their contract is rising by £3 a month, would pay more than then if their price rise was linked to inflation. If their bill went up by 6.5 per cent – this is based on that November inflation figure, plus 3.9 per cent – they would pay an extra £1.62 a month.
But for someone on a more expensive contract that costs £59.99 a month, a £3 rise would be cheaper than an inflation-linked price rise, which would cost an extra £3.89 a month. An Ofcom spokesperson previously said: “Inflation might be low now, but as we’ve seen in recent years, it can be incredibly volatile, and we don’t think consumers should bear that risk.
“Our intervention means customers will have certainty and clarity upfront about the prices they will pay, so they can compare offers and select the best deal for them.”