Ofcom bans rollover contracts for broadband customers

Stopped because of 'lock-in' fears

Ofcom has announced a significant change to rollover contracts for landline and broadband users, making it illegal for companies to renew a minimum contract period without consent.

At the moment, a broadband provider can roll over a customer's contract and renew their minimum contract period without notification.

This means that unless the customer realises they are in a 30-day opt out period the contract will be renewed and they will face a fine if they try and leave their provider early.

Ofcom's new ruling means that, as of December, landline and broadband providers will have to notify customers that their contract is coming to an end, giving users sufficient time to choose to renew their contract or look for a cheaper deal elsewhere.

Contract termination

If you are currently on one of these contracts, however, providers will have until 2012 to push you on to another contract – it is only the sale of this type of contract to new users that has to be stopped by December 2011.

Ofcom believes that around 15 per cent of people in the UK are on an Automatically Renewable Contract (ARCs), so this change is one that will affect many.

Speaking about the new ruling, Ofcom Chief Executive, Ed Richards, said: "Ofcom's evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit.

"Our concern about the effect of ARCs and other 'lock in' mechanisms led to our decision to ban them in the communications sector."

Via The Next Web


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