Ofcom, the independent regulator and competition authority for the UK communications industries has confirmed that ''rollover contracts, which tie landline and broadband customers into repeated minimum contract periods unless they opt out, will be banned from December this year''.
Why is a ban needed?
Automatically renewable contracts (ARCs) look consumers into new long term deals when their existing contract ends. As most consumers do not keep track of when their broadband or landline contracts are due to expire ARCs kick-in when consumers do not choose to opt-out.
According to Ofcom ''BT is the largest communications provider currently offering these contracts and Ofcom estimates that approximately 15 per cent of UK residential consumers are on rollover contracts. Ofcom’s evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit.''
The Ofcom ban has been welcomed by consumer action groups.
Timetable of changes
- From 31st December 2011 communication providers will no longer be able to sell ARCs to residential or small business customers.
- By 31st December 2012 existing ARCs will have to be completely removed and existing customers moved onto alternative deals.
Further reading: Here is the full Ofcom statement on ARCs