The UK advertising watchdog has launched an investigation into whether telecoms companies are misleading consumers about inflation-busting bill increases when promoting deals in their marketing campaigns.
Telecoms companies make billions of pounds annually by instituting price rises to mobile and broadband bills midway through contract periods – increases that will add to the biggest squeeze on the cost of living facing households in generations.
The Committees of Advertising Practice (Cap) – which write the codes that all UK advertisers have to follow when running ads in any media, from TV and newspapers to billboards and online – have launched a consultation to scrutinise whether telecoms companies are clearly telling consumers about looming price rises in their campaigns.
The timing of the decision to launch the consultation is in part due to concerns that many telecoms companies raise prices annually in line with inflation, now at a 40-year high, which means millions of consumers could face bill rises of as much as 20% next spring.
“Rising inflation means consumers are experiencing a squeeze in the cost of living across all essential expenditure, including utilities, with low-income groups the hardest hit,” Cap said. “In that context, it is even more important that consumers are presented with clear and prominent information in advertising about what their contract will cost them throughout its term.”
The consultation aims to examine whether telecoms marketing, which Cap said was often complex, complies with rules preventing misleading advertising including by not omitting material information on price changes.
“The variety of contract types, product bundles and media involved can provide a challenge to how this information is presented,” it said.
“Monthly cost is likely to be one of the key considerations for consumers when choosing a telecoms package, and so it is reasonable to consider that the fact that price will or may not remain the same throughout the contract should be as upfront as possible, to enable consumers to make properly informed decisions between packages.”
Issues include not explaining terminology relating to rises such as the retail prices index and consumer prices index – two different measures of the rate of inflation – and not clearly telling consumers that introductory prices will not be the amount they will pay by the end of their contracts.
Other issues include promoting deals just before annual price increases are introduced each April, so consumers only get an offer for a very limited time.
“This Cap consultation is an essential step to helping people make an informed decision about the contract they’re about to take out,” said James Fredrickson, the policy director at the broadband firm Hyperoptic. “It’s vital in this time of increasing financial pressure that people know what they will pay for the lifetime of their contract.”
Last month, the consumer group Which? estimated that 5.7m households faced at least one “affordability issue”, such as missing a payment or having to cancel or change their mobile, landline or broadband service in April.
In June, the UK’s biggest mobile and broadband companies agreed a plan at a government-led summit to help customers struggling to pay bills, including moves to allow switching to cheaper deals without paying a penalty and offering more low-cost “social tariffs”.
