UK telecom regulator bans rollover contracts

In a move to protect consumer interests, UK telecom watchdog Ofcom has banned rollover contracts for landline and broadband customers. The regulator accused providers of locking households into long-term deals with no additional benefit.

The packages allow for contracts to roll forward to a new minimum term, often with penalties for leaving, unless the consumer opted out of the renewal. That would be scrapped from 31 December, according to Ofcom.

The regulator said the automatically-renewable contracts (ARCs) made it harder for customers to switch provider and subsequently damage competition.

Though the move has been welcomed by consumers, the largest communications provider to offer ARC, BT, slammed the decision claiming that customers were happy with the discounts on offer.

According to Ofcom, around 15 per cent of UK residential consumers were on rollover contracts. It added that the ban would apply to ARCs for landline and broadband services sold to residential and small business customers.

According to Adam Scorer, director of external affairs at consumer interest group, Consumer Focus, the decision had been welcomed by consumers.

Rollover contracts tend to be confusing and penalising for customers and many people had been unknowingly rolled over into another contract, he said, adding that it had left them unfairly tied into a contract which they had to pay a penalty fee to exit.