Martin Lewis issues broadband ‘rip off’ warning as | European Markets

Cash Saving Knowledgeable founder Martin Lewis has warned about mid-contract price hikes for cell and broadband offers.

New guidelines launched by the regulator Ofcom imply suppliers can nonetheless raise costs mid-contract, however they now have two choices.

The primary option permits suppliers to withhold the precise quantity costs will rise every April, however they have to give clients the selection to depart penalty-free within 30 days of the increase.

The second option requires suppliers to obviously state in kilos and pence how a lot costs will rise every April when signing up. Beforehand, suppliers based mostly will increase on future inflation charges, leaving many shoppers unsure about potential prices.

Nevertheless, whereas the rule change has been praised for its “transparency,” it may lead to some households footing a a lot bigger invoice than they beforehand would have below the previous guidelines.

In a new post on social media platform X, Mr Lewis wrote: “Finally, there’s a ban on firms hiking mobile and broadband bills mid-contract linked to inflation. Yet the way they’ve done it means some winners and some losers.

“Yes, the 17% mid-contract inflation-linked rises are now banned. Good for transparency, however, in practice, some will now face even bigger ones.”

He added: “Millions are being ripped off by overpaying on mobile and broadband.”

In a video shared alongside his post, the money-saving guru defined the new guidelines on mid-contract price will increase utilizing an instance. He stated: “Virgin Media had a deal the other day on broadband – around £25 a month.

“Then it says in April, you will pay £3.50 a month more. And the following April, because it was a contract that lasted over two Aprils, you’ll pay another £3.50 a month more. So £25 will go up to £28.50, and £28.50 will go to £32 a month by the time your contract finishes.”

“That’s the new way they’re going to communicate, and they’re allowed to do it. My problem with this is, while I think this is good for transparency and at least you’ll understand what you’re paying, I wanted to see them ban any mid-contract price rises that are above inflation. But that isn’t happening.

“In fact, for some people, the percentage rise will be far greater than it was with inflation. Think about it: if you’re increasing everybody’s contract no matter what they’re paying by £3.50, someone paying £20 a month will see a massive rise – 16%, 17%. Somebody paying £40 a month, they’re seeing a rise of 8% or 9%.

“So we’re going to see some shifting of the pricing mechanisms that go on here. And what it also allows firms to do, this new model that Ofcom has come up with is it allows firms to price low early on – for a low headline price – but then bump up higher prices year by year.”

He added: “Let’s make this extreme – no one’s doing this at the moment – you could start at £20, but then in a few months time in April, it’s going up to £30. In the year after, it’s going up to £40. That could legitimately work within the rules.”

Mr Lewis then clarified that the new guidelines solely apply to new contracts.

Nevertheless, as soon as your present contract ends, even if you happen to roll it over, it is going to depend as a new one.

Signing off the video, Mr Lewis urged people to test in the event that they’re out of contract on their cell or broadband offers, which may imply they’re paying an excessive amount of.

He stated: “14 million people are out of contract on their mobile phones. Text ‘INFO’ to 85075, and that’ll tell you whether you’re out of contract in most cases but not in every case. It can’t work in every system.”

He added: “Go and make sure you’re not being ripped off on your broadband and mobile.”