Ofcom has announced that broadband and landline contracts that automatically roll-over after the minimum contract period has ended unless Brits opt-out, are to be banned from December.
The regulator estimates that around 15 percent of UK residents are on rollover contracts, which are also known as Automatically Renewable Contracts (ARCs) and see many Brits incurring charges to extract themselves as the contract has rolled-over into a new minimum period. Ofcom said BT, Adept Telecom and Axis Telecom were among providers currently offering the contracts.
"Ofcom's evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit. Our concern about the effect of ARCs and other 'lock in' mechanisms led to our decision to ban them in the communications sector," said chief executive, Ed Richards.
The regulator has revealed these contracts will be banned from December 31 and providers must move all customers currently on rollover contracts to new deals before the December deadline.
Michael Phillips, product director at comparison site Homephonechoices.co.uk said the announcement was "great news for consumers".
"Automatic renewal was locking some consumers into services that were no longer suitable for their requirements and were often less competitively priced than newer offerings," he said.
"The ban recognises this and recognises that consumers should be empowered to regularly compare prices and packages and choose to remain with a provider if it suits them, rather than being forced to do so. It is always worth checking that the broadband and home phone package you are using is right for you."