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Ofcom extends enforcement programme into early termination charges

The enforcement programme is looking at the charges imposed when consumers on fixed term contracts terminate those contracts early (early termination charges or ‘ETCs’). It has already been extended twice, having started in June 2017.

Background: Under the programme, Ofcom has been collecting information and reviewing consumer complaints to assess whether there are any issues with the transparency and fairness of ETCs, and whether any further action, including enforcement action, is required.

What’s new? Ofcom has decided to extend this programme for a further six months to 28 June 2019 and is continuing to engage with providers where they have queries or concerns about their ETCs and/or the transparency of ETC information made available by CPs to consumers. This comes in light of the findings of recent investigations into Virgin Media and EE's ETCs (Ofcom issued collective fines of £13.3m).

The concern: Ofcom believes communications providers are unlikely to be fulfilling their regulatory obligations where ETCs are calculated based on an amount that is higher than a consumer’s monthly subscription price (e.g. by failing to take account of any price discounts being received by the customer); if a specific ETC rate is not published, the amount and nature of the cost savings that are applied to calculate the ETC are not clearly specified (e.g. VAT, or the specific percentage discount that is applied), so that a consumer is unable to work out, with certainty, how much their ETC will be; and consumers have to refer to information set out in separate documents in order to be able to calculate their ETCs.

Next steps: Any further enforcement action that is taken as a result of the work under this programme will be decided later. The regulator previously fined Virgin Media and EE £13.3m over charges for early contract termination.