Advertising watchdog amends price rise guidance

To remain aligned with Ofcom's upcoming ban on inflation-linked annual price rises from January, the Committee of Advertising Practice (CAP) has published updated guidance.

Changes to the guidance mean providers will need to disclose any in-contract increases as full future monthly charges, rather than simply what will be added on.

Providers must also stop using inflation-linked and percentage-based annual price rises from 17th January 2025 when Ofcom's ban comes into force.

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Full future monthly charges

From 17th January 2025, CAP will bring in new guidance around the advertising of broadband and mobile deals in line with Ofcom's new rules on annual price rises.

Ofcom ruled to ban inflation-linked annual price rises in July 2024, with the new regulations also coming into force on 17th January 2025, when providers must give any annual price rises in pounds and pence only.

CAP's new guidance interestingly takes things a step further, by ensuring providers include any future price rises as total monthly prices in advertising, with increases added to the original price no longer adequate.

Previously, we've been used to seeing annual price rises given as an amount that will be added to the contract price each year. For example, new pounds and pence-based rises are currently being advertised as "+ £3 per month in [April] of each year".

These new guidelines will change advertisements so customers have clear future total monthly prices displayed as prominently as the initial monthly price. An example of this could be something like:

"£39.99 per month, then £43.99 per month from April of next year"

However, this will become trickier for providers who have 18- and 24-month contracts where they may also need to provide a second price rise for the following year.

CAP has also underlined that providers must consider the time of year of their promotion, in terms of how quickly the next price rise will apply, and as above, how many price rises a customer will be subject to within their minimum term contract.

Annual price rises

Mid-contract price rises have been under debate since February 2023, when Ofcom started their investigation into whether or not the practice of inflation-linked price rises was fair.

At the time, annual price rises on broadband and mobile had reached record highs of up to 17.3% in April 2023, after inflation rose to 10.5% on the Consumer Price Index (CPI) and 13.4% on the Retail Price Index (RPI).

While Ofcom took until July 2024 to formally announced their decision to ban inflation-linked price rises, CAP bought in new advertising guidance in December 2023 to improve the clarity around these mid-contract annual price increases.

These initial guidelines ensured any in-contract price rises should be featured prominently relative to the monthly price in advertisements, and that ads must not give the impression the monthly price will last for the duration of the contract where that is not the case.

In October 2024, BT, EE, Plusnet, TalkTalk, O2 and Virgin Media were all slapped by the ASA for misleading advertisements due to not including the annual price rise amount within their guidelines and as prominently as the headline price on their websites.

With annual price rises now moving to a pounds and pence-based methodology only, and percentage and inflation-linked price rises now banned, it's simple for providers to know the full amount they'll be charging customers at the start of their contracts.

The latest guidance from CAP will ensure customers are now given annual price rises as full monthly amounts, as well as to be clear exactly how much will be paid and when depending upon when a contract is taken out and when the annual price rises will apply.

One outcome we could see from this therefore, is providers aligning price rises with contracts, rather than a particular month in the year as they currently do, which would at least equalise price rises for all customers.