Ending phone contracts to become cheaper for UK customers

The charges imposed on consumers for leaving their landline phone contracts early will be cut by as much as 85% Ofcom has announced.

Over the past 18 months, Ofcom has been working with the three biggest UK landline providers, BT, TalkTalk and Virgin Media, to ensure that the charges they levy when customers end their contracts early (early termination charges), reflect the costs that the providers save by no longer providing the service. Cheaper early termination charges will also apply to landline customers who receive broadband in the same package.

Communications providers have obligations to meet under the Unfair Terms in Consumer Contract Regulations 1999 (the Regulations). Ofcom’s interpretation of the Regulations is that consumers who end contracts early should never have to pay more than the payments left under the contract – in fact they should often pay less, to reflect the costs providers save because the contract ends early.

Ofcom published a statement about its view of the law in December 2008, and opened a monitoring and enforcement programme in early 2009 to check whether communications providers terms and conditions comply with the Regulations.

BT, TalkTalk and Virgin Media do not believe their early termination charges were unfair. But, after constructive discussions, they have agreed to significantly reduce those charges for landline (or landline plus broadband) services.

Each provider has different costs to account for so early termination charges will vary from provider to provider.

Ofcom expects other landline providers to apply similar principles and to reduce their early termination charges to similar levels. If they dont, they could face formal enforcement action.

Ofcom’s Partner for Strategy and Market Developments, Peter Phillips, said:

“We very much welcome the reductions made by BT, TalkTalk and Virgin Media which mean that consumers will face much lower charges if they wish to end their contracts early.”