Ofcom has introduced new rules which will ban telecoms and pay TV providers from including inflation-linked or percentage-based price rises in new contracts.

We have previously commented on Ofcom’s consultation into this subject here (and the CMA’s response here). It came amidst concern about the degree of uncertainty in-contract consumers face about future price rises when they are tied to inflation. The unpredictability of inflation rates means it can be difficult to know, months in advance, what an inflation-linked price rise will equate to in pounds and pence when consumers enter a contract. A similar concern arose in relation to so-called “percentage-based” price rises, as evidence suggested there is equally a lack of clarity and transparency as to what they amount to in pounds and pence.

The new rules will put an end to this uncertainty, stipulating that “providers, when they provide for a change to the monthly price of their services during the contract term [must] set that change out at the point of sale in pounds and pence”. Furthermore, information about such changes must be “drawn prominently to the customer’s attention in a clear and comprehensible manner”.

Ofcom points out that the new rules do not restrict the ability of providers to increase prices during the contract period, nor prescribe the level at which the prices may be increased. However, “they will prohibit providers from including inflation-linked, or percentage-based, price terms that apply to the Core Subscription Price in new contracts”.

Responding to the announcement, the Committees of Advertising Practice – which had previously published guidance when inflation-linked prices were permitted, and included measures advertisers should take to ensure information about inflation-linked price increases was clear and up front – stated that it will “continue to engage with Ofcom to better understand how this new policy intersects with our guidance”.

The new rules will apply to all new contracts from 17 January 2025, and the full Statement from Ofcom can be read here.