CONSUMERS ARE TO get new rights to allow them to quit their mobile and broadband contracts for free if their provider announces plans to increase their bills.

Media Minister Patrick O’Donovan will bring a memo to Cabinet today that seeks to give  consumers the legal right to exit their mobile and broadband contract if their provider proposes to hike up their monthly or annual charge. 

Customers will now be allowed to do this without being financially penalised. 

At present, many mobile and broadband providers insert what’s known as in-contract price increase (ICPI) clauses, which allows them to raise the price a consumer pays for their services during the course of their contract. 

This typically means that consumers will see their monthly mobile or broadband bill increase by several euros a month after 12 months.

Typically those increases are announced in spring each year and means consumers are subject to at least one price increase and are unable to switch providers without incurring a financial penalty. 

24-month contracts

For 24-month contracts, which is the maximum contract duration allowed by law and the typical duration of most contracts, there may be two price increases without a right to exit without penalty. 

The issue has been highlighted before by the likes of Sinn Féin’s Pearse Doherty, who called for the practice to be banned last year. He said at the time that when people sign up to a phone, broadband or TV contract, they should be certain about what they are going to pay.

“This practice not only hits households with punishing price rises, but it also means that they have no certainty about the money that they will pay for these services,” he said. 

A ComReg survey of broadband customers last year found that the majority do not know how an ICPI clause operates. The Commission for Communications Regulation has also made it clear that banning this practice could only be achieved through legislation.

Minister O’Donovan will ask Cabinet today to approve his plan for a new law giving consumers a statutory right of exit without penalty from electronic communications service contracts when the mechanism used to increase the price is an in-contract price increase clause. 

Under the changes, a provider will have to give a minimum of 30 days notice to their customer prior to the price increase taking effect, during which time the consumer may exit the contract without penalty.

The right to exit period begins from the point of notification to the date the price increase takes effect, the memo outlines. 

While it is anticipated that some providers may resist this measure, the minister is likely to argue that his proposals are less intrusive than a total ban on the use of ICPI clauses, which he also considered, with regard to their right to conduct their business. 

He will argue that his approach is more balanced and at a time of ongoing cost-of-living pressures, consumers should have a choice that allows them to exit contracts that are no longer cost-efficient for them and shop around for better offers.