MARTIN Lewis has issued a warning to mobile and broadband customers over “above inflation” bill rises despite a big rule change.
Regulator Ofcom has said it will ban mobile and broadband providers from mid-contract price rises linked to inflation.
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Broadband, mobile and pay-TV firms will no longer be able to hit customers with inflation-linked price hikes halfway through their contract from January 2025.
But, MoneySavingExpert.com (MSE) founder Martin Lewis has warned, that the new rules will still allow for “above-inflation” price rises.
Prices can still go up, but providers will have to set out any rises “prominently and transparently” – in pounds and pence – before new contracts are taken out.
Currently, most firms tie price hikes to future, as-yet-unknown rates of inflation – often with an extra percentage on top.
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It means millions of customers faced hikes of up to 8.8% this year — adding as much as £50 to bills.
Effectively the changes mean this common practice will be banned from January 17 next year.
MSE pointed out that although these new rules ban price hikes directly linked to inflation, they still allow for annual mid-contract increases by a fixed amount.
This means that prices could still rise by more than inflation.
Martin and MSE have repeatedly called for above-inflation mid-contract price hikes to be banned, as they say the hikes are “anti-competitive and inflationary”.
In December last year, after Ofcom’s proposals were first announced, Martin said: “This is a definite improvement, though based on this proposal I’ll be asking it to consider changing it so the rise should always be the ‘lower of CPI inflation or a fixed pounds and pence amount’ so the rises can never be above inflation.”
Martin also called out the issue in a letter to former Chancellor Jeremy Hunt in January this year, and called for an override so that any price rises “cannot be more than inflation”.
How to save on your mobile phone bill
NOT happy with your current mobile phone deal?
If you’re outside the minimum term of your contract then you won’t need to pay a cancellation fee – and you might be able to find a cheaper deal elsewhere.
But don’t just switch contracts because the price is cheaper than what you’re currently paying.
Take a look at how many minutes and texts, as well as how much data you’re using, 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 end up spending extra on bundles or add-ons each month.
Also note that if you’re still in your contract period, you might be charged an exit fee.
Ready to look elsewhere? Pay-as-you-go deals are better for people who don’t regularly use their phone, while monthly contracts usually work out cheaper for those who do.
It’s worth using comparison websites, such as MoneySupermarket and uSwitch.com, to compare tariffs and phone prices.
Billmonitor also matches buyers to the best pay-monthly deal based on their previous three months of bills.
It only works if you’re a customer of EE, O2, Three, Vodafone or Tesco Mobile and you’ll need to log in with your online account details.
There’s also MobilePhoneChecker, which has a bill monitoring feature that recommends a tariff based on your monthly usage.
If you’re happy with your provider then it might be worth using your research to haggle a better deal.
Have any firms already made these changes?
Some providers have already made moves to get ahead of the new Ofcom price rise rules.
Plusnet will apply a flat rate charge for all broadband customers, increasing by £3 a month each year.
The changes will be implemented on March 31 each year, so if you pay £30 a month now, that will go to £33 in 2025 and £36 in 2026.
Previously they increased by the rate of inflation plus 3.9%.
Meanwhile, a 5% rise will apply to out-of-bundle services.
Likewise, broadband and mobile coverage from EE and BT will take a similar route.
EE Mobile deals will rise by £1.50 a month along the same annual structure.
Users of connected devices, including laptops, tablets and smartwatches, will see the same increase.
This will be £2 for TV customers and £3 for broadband, with the same 5% rise in out-of-bundle prices.
Vodafone will inform customers upfront about the exact cost of their contracts in pounds and pence, including when price rises will occur, from July 2
For instance, customers who sign a contract in August 2024 will still see their bills adjusted in April 2025 and then again in April 2026 by a predetermined amount:
It will charge £1 a month more for phone coverage and £3 for its broadband.
How can I cut broadband and mobile costs?
The simplest way to save more of your hard-earned cash is by switching your supplier when your contract expires.
If you’re outside the minimum term of your contract then you won’t need to pay a cancellation fee – and you might be able to find a cheaper deal elsewhere.
If you’re still in your contract period, you might be charged an exit fee.
But don’t just switch contracts because the price is cheaper than what you’re currently paying.
Take a look at how much speed you need for broadband or how many minutes and texts, as well as how much data you’re using on your mobile, to find out which deal is best for you.
Use comparison websites, such as MoneySupermarket and Uswitch to compare the best tariffs and phone prices.
If you’re happy with your provider then it might be worth using your research to haggle a better deal too.
It’s also worth checking out some providers which don’t charge mid-contract price rises.
These include Voxi, Lebara, Giffgaff, Smarty, Lyca Mobile and Asda Mobile.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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