On Jul. 19, UK ASA issued statement on new Ofcom price rise rules.
UK ASA's Committee of Advertising Practice (CAP) issued a statement on new UK OFCOM rules on inflation-linked price increases, regarding information about inflation-linked price increases being clear and up front, to avoid misleading consumers.
CAP Statement
UK OFCOM introduced new rules requiring telecoms providers to set out any in-contract price rises clearly in pounds and pence before customers sign up to a contract.
This will prohibit providers from including inflation-linked or percentage-based price rise terms in new contracts; new rules, guidance will take effect on Jan. 17, 2025.
Last year, CAP published guidance on presentation of mid-contract price increases in telecoms ads, following a public consultation. This guidance was developed in a context in which contracts including inflation-linked price increases were permitted by OFCOM.
It included measures advertisers should take to ensure information about inflation-linked price increases was clear and up front, to avoid misleading consumers.
Since OFCOM confirmed these increases will be prohibited, CAP will continue to engage with OFCOM to better understand how the policy intersects with our guidance.
Prohibiting Inflation-Linked Price Rises
OFCOM stated that wherever telecoms/pay TV providers include price rises in their contracts, they must set these out clearly in pounds, pence, before customer signs up.
In Dec. 2023, OFCOM consulted on making changes to its general conditions to require providers, where applying in-contract price rises, to set them out upfront, in pounds and pence, at the point of sale; OFCOM decided to proceed with these changes.
When new rules in effect, they will prohibit providers from including inflation-linked or percentage-based price rise terms in new contracts; providers must draw information about in-contract price rises information to customer’s attention before they are bound by the contract, in a clear, comprehensible manner, including during a sales call, etc.
Or in other verbal sale, e.g. in-store sale, to enable them to make an informed choice.
Providers must also set out when any changes to the monthly price will occur.
Providers may increase their prices during contract period, new rules do not restrict their ability to set the price level; but do prohibit providers from including inflation-linked/percentage-based price rise terms to Core Subscription Price in new contracts.
This will give consumers clarity and certainty about the price they will pay.
Guidance on OFCOM Expectations
UK OFCOM also issued guidance to accompany the new rules, to assist compliance.
Includes examples of how providers could present any in-contract price rises.
Effectiveness
The new rules and guidance will apply to new contracts from Jan. 17, 2025.
Nov. 2024 Amended Guidance
On Nov. 28, 2024, UK ASA announced that CAP and BCAP issued an updated version of existing guidance on the presentation of mid-contract price increases in telecoms ads.
Amendments reflect changes to Ofcom rules that will have the effect of banning inflation-linked/percentage-based price increases in new contracts from Jan. 17, 2025.
It will replace the version of the guidance found here from that date.
Amendments clarify that the full future monthly price and when it will rise are likely constitute essential information for consumers to make informed decisions.
The means to calculate the future price will always be known in advance, percentage-based presentations of price are unlikely to be sufficient to avoid misleading consumer.
