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News Every Day |

Major mobile provider AXES sneaky price hikes ahead of new rules

A MAJOR mobile provider is AXING sneaky mid-contract price hikes ahead of new rules.

Vodafone will no longer apply inflation-linked price rises for consumers and some small business customers.

London, UK. August 3 2022: exterior view of a Vodafone store on Oxford Street.
Rex
However, the change will only affect new customers of those renewing a contract in July[/caption]

This change comes in response to an Ofcom consultation that emphasised the need for transparency in mid-contract price increases.

It means from, July 2 2024, Vodafone will inform customers upfront about the exact cost of their contracts in pounds and pence, including when price rises will occur. 

However, the change will only affect new customers of those renewing a contract with the telecom provider after this date.

For instance, customers who sign a contract in August 2024 will have their bills adjusted in April 2025 and then again in April 2026 by a predetermined amount:

  • £1 more per month for mobile services
  • £3 more per month for broadband

Vodafone has said that price increases will not be applied to customers identified as financially vulnerable or those on social tariffs.

This includes customers on Vodafone’s social broadband tariff dubbed “Vodafone Essentials”.

Pay-as-you-go users won’t be affected by the change as they aren’t signed up to a fixed contract.

Vodafone serves over 18million UK households and offers home broadband services to 660,000 homes.

It comes just weeks after Sun Money took a deep dive into the firms hiking fixed deals by up to £50.

WHO WILL MISS OUT

Vodafone customers who signed up for a mobile or broadband package before July 2 will still face inflation-linked price rises each April until they switch or change deal.

This means these customers’ prices will rise by whatever December’s inflation figure is plus 3.9%.

For example, if inflation stood at 3% in December 2024, the price of your contract would rise by 6.9% in April 2025.

This would mean someone paying £25 a month now would see their bill rise by £1.73 to £26.73 a month.

As soon as you change your contract after July 2, you will no longer pay inflation-linked price rises.

INFLATION-LINKED PRICE HIKES

TELECOM firms have come under fire for above-inflation mid-contract price rises on fixed contracts for the past four years.

Due to clauses in contracts, providers can impose annual rises, usually in April.

The hikes are tied to either the Consumer Price Index or Retail Price Index inflation rate, which has soared during the cost-of-living crisis.

It means millions of customers faced hikes of up to 8.8 per cent this year — adding as much as £50 to bills.

Firms argue that they need to be able to increase prices to keep up with rising costs.

But consumer experts argue that a fixed contract should live up to its name — and stay fixed.

Rocio Concha, Which? director of policy and advocacy, said: “Which? has long campaigned against unpredictable inflation-linked mid-contract price rises so it’s positive that Vodafone has announced it will no longer include these hikes in new contracts from July and will instead clearly set out any increases in pounds and pence. 

“However, Vodafone should also give certainty to customers already locked into existing contracts by giving them the option to move to predictable price increase terms as soon as possible.”

We’ve asked Vodafone to confirm if existing customers can switch contracts before April to ensure their deal is covered by the new rules.

NEW RULES ARE ON THE WAY

Ofcom announced last month that firms will soon be ordered to clearly state any proposed price rises during fixed contracts in pounds and pence.

The regulator is seeking to ban firms from including any inflation-linked or percentage-based price rises on all new contracts.

If current plans go ahead, the new rules, which Ofcom has consulted on, should come into effect by October.

Ofcom chief executive Dame Melanie Dawes said: “At a time when household finances are under serious strain, customers need prices to be crystal clear.

“But most people are confused by the unpredictability and complexity of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.

“Our tougher protections would ban this practice once and for all, giving mobile customers the clarity and certainty that they need to secure the best deal to suit their needs and budgets.”

However, Rocio added: “Other telecoms providers still including these unfair mid-contract price hikes in contracts should do the right thing and adopt Ofcom’s proposals to ban these inflation-linked increases as soon as possible.

“Vodafone’s announcement also proves that big providers can make these changes quickly so there’s no reason Ofcom should cave to industry pressure to delay the ban.”

EE and Plusnet, part of BT, have also said that they will no longer raise prices based on inflation — and will instead display them in pounds and pence.

CUT YOUR TELECOM COSTS NOW

SWITCHING contracts is one of the single best ways to save money on your mobile, broadband and TV bills.

But if you can’t switch mid-contract without facing a penalty, you’d be best to hold off until it’s up for renewal.

But don’t just switch contracts because the price is cheaper than what you’re currently paying.

Take a look at your minutes and texts, as well as your data usage, to find out which deal is best for you.

For example, if you’re a heavy internet user, it’s worth finding a deal that accommodates this so you don’t have to spend extra on bundles or add-ons each month.

In the weeks before your contract is up, use comparison sites to familiarise yourself with what deals are available.

It’s a known fact that new customers always get the best deals.

Sites like MoneySuperMarket and Uswitch all help you customise your search based on price, allowances and provider.

This should make it easier to decide whether to renew your contract or move to another provider.

However, if you don’t want to switch and are happy with the service you’re getting under your current provider – haggle for a better deal.

You can still make significant savings by renewing your contract rather than rolling on to the tariff you’re given after your deal.

If you need to speak to a company on the phone, be sure to catch them at the right time.

Make some time to negotiate with your provider in the morning.

This way, you have a better chance of being the first customer through on the phone, and the rep won’t have worked tirelessly through previous calls which may have affected their stress levels.

It pays to be polite when getting through to someone on the phone, as representatives are less inclined to help rude or aggressive customers.

Knowing what other offers are on the market can help you to make a case for yourself to your provider.

If your provider won’t haggle, you can always threaten to leave.

Companies don’t want to lose customers and may come up with a last-minute offer to keep you.

It’s also worth investigating social tariffs. These deals have been created for people who are receiving certain benefits.

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