Ofcom tackles "unfair" hidden charges

 

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By Simon Aughton

Posted on 29 Feb 2008 at 11:39

Ofcom has unveiled proposals to curb "unfair" charges on broadband bills.

The telecoms regulator says that falling prices are masking hidden charges, such as penalties for paying by cash or cheque rather than by Direct Debit, or for cancelling a contract early.

The watchdog has pointed providers to the Unfair Terms in Consumer Contract Regulations 1999, which are intended to ensure that additional charges are fair and transparent.

Backed by the legislation, Ofcom says that additional charges which are not part of the main contract must be "demonstrably fair". In addition, when providers advertise prices it wants the extra charges for paying by cash or cheque to be clear.

Regarding late payments, Ofcom says that providers need to make customers aware of the associated penalties and give them a "fair chance" to pay the bill before imposing them. While, charges for non-Direct Debit payments should only reflect the provider's costs.

Contract length

Providers must also make the length of contracts clear, as well as the costs of breaking a service agreement. A consumer who ends a contract early should never have to pay more than the payments left under the contract period, Ofcom says.

"Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is necessary to include them," says Ofcom Chief Executive Ed Richards.

"In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers."