Citizens Advice response to Ofcom consultation on end-of-contract and out-of-contract notifications
Citizens Advice supports Ofcom’s proposals to require providers to notify mobile consumers when their contract is nearing an end, and to send a one-off notification to all out-of-contract consumers.
In the mobile and broadband market, consumers can pay an annual loyalty penalty of hundreds of millions of pounds. This arises because consumers remain in their contract once the minimum term has ended. Timely, well-designed notifications will help to address the loyalty penalty in both markets, by informing customers of their options once their contract ends and encouraging some to take action. Too few consumers currently know their options, for instance that they could save by switching to a SIM-only deal.
Consumers should be informed of their options, particularly if they can save money. However, for notifications to be effective at encouraging consumers to switch they need to be well designed. Ofcom should:
Conduct randomised control trials (RCTs) to determine the most effective notification content and timing
Require providers to send more than one end-of-contract notification to mobile consumers
Considering whether broadband and mobile consumers should receive different notifications to reflect the difference in the way that consumers are penalised in these markets
In addition, whilst Citizens Advice supports notifications, they will not be enough to end the loyalty penalty. Ofcom should conduct further analysis of consumer detriment in the broadband market, and gather data on consumers who are already out of contract and how much they are overpaying by. This information can form the basis of future remedies.
We were pleased to see Ofcom announce a consultation on a proposed solution to the problem of overpayment in the bundled mobile phone market. We will be responding in due course. Consumers who enter into these contracts must see their bills reduce at the end of the contract to reflect the fact that they’ve paid off the handset component.