Now Ofcom Goes for Hidden Extras

After Wednesday's news that Ofcom had set a deadline for O2 to meet its 3G licence obligations, the communications regulator has now announced proposals to curb unfair additional charges levied by all UK  communications providers on consumers' bills. Ofcom says the proposals are designed to ensure that extra charges are fair and that mobile, landline, broadband and pay-TV providers clearly market the true cost of their services.
Increasing competition has driven down headline prices and offered consumers more choice. However, says Ofcom, falling headline prices are not the whole picture. Consumers may also pay additional charges as part of complicated contract terms. Some providers make a range of additional charges; for example, when consumers choose to pay by cash or cheque rather than by Direct Debit; cancel a contract before the minimum period has finished; or make a late payment.
Ofcom is proposing to introduce new guidance for communications providers. This will spell out Ofcom's view of the law and what communications providers have to do to meet their obligations under the Unfair Terms in Consumer Contract Regulations 1999 to ensure that additional charges are fair and transparent.
Once the guidance has been finalised, Ofcom is proposing to give communications providers three months to comply. Ofcom will then start an enforcement programme - where necessary through the courts.
The draft guidance has two main principles. The first is that providers need to be clear and up front with their consumers and do more to make it easy for consumers to understand the charges. The second is that charges that are not part of the price of a main service under the contract must be demonstrably fair.
Ofcom is seeking views on the draft guidance. The consultation is published here, and the closing date for responses is 8 May 2008. Ofcom expects to publish the final guidance in autumn 2008.
Consumers are benefiting from greater competition and lower prices, says Ofcom Chief Executive Ed Richards. But for consumers to get an all-round fair deal, they need to know the full costs of the services they are buying. Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is necessary to include them. In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers."