Ban on automatic phone and broadband renewals announced

Source: http://money.uk.msn.com/blog/pounds-and-sense-blogpost.aspx?post=41d98855-8ebf-4cd9-a208-31ebd3972fa1

Companies had previously been allowed to roll customers over into Automatically Renewable Contracts (ARCs) when users’ original contract periods had come to a close, unless the customer actively chose to opt out.

That practice will be outlawed from 31 December, Ofcom announced today. The move has been welcomed by consumer groups, who complained that users had previously found themselves locked into deals that no longer suited their needs or offered them value for money.

15% of customers affected
The watchdog estimates that around 15% of UK residential customers are on these ‘rollover’ deals, with BT the largest communications firm currently providing them.

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.”

Adam Scorer, director of external affairs at Consumer Focus, said: “A rollover ban is extremely welcome for consumers. Rollover contracts can be confusing and penalise customers.”
He added: “Many people have been unknowingly rolled over into another contract. This has left them unfairly tied into a contract that they had to pay a penalty fee to escape.”

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