Utility Warehouse ditches unfair cancellation feesWhich? phone investigation results in consumer win

28 April 2010

Home phone contract terms can be unclear and confusing

Home phone and broadband provider Utility Warehouse plans to do away with its £50 early termination charge following criticism in a Which? investigation into home phone cancellation fees.

The Which? investigation, first published in late February, revealed that Utility Warehouse was in breach of Ofcom guidance on early termination charges. This guidance places limits on how much you should have to pay to leave a phone or broadband contract early. 

Discover your rights when cancelling your phone or broadband deals in the Which? guide to phone contracts

Ofcom phone and broadband rules

At the time of the investigation, Utility Warehouse advertised its phone and broadband bundles as contract-free, but charged £50 for customers to leave within 12 months. Which? regarded this as an early termination charge. If you cancelled your phone and broadband bundle 10 or 11 months in to your 12 month contract, the £50 cost of ending your contract would have exceeded the cost of simply staying with the company till the end of the contract. 

This breaches Ofcom's guidance on phone charges. The guidance states that phone contract early cancellation fees should never exceed the cost of remaining contractual monthly payments, less any savings the provider makes from no longer providing the service. 

Take a look at our guide to cancelling a contract without being penalised.  

Utility Warehouse cuts exit fees

From 4th May, Utility Warehouse has committed to cutting its charges for ending any of its broadband or phone/broadband contracts early. 

A spokesperson told us: 'In order to avoid any doubt or confusion around our message of "no minimum contract term" on our Broadband services (including our home phone and broadband bundle, BroadCall) we will no longer charge any customer an early termination fee. 

Customers are free to leave at any point - all they will need to pay is a £10 administration fee to cover processing their cancellation.'

Utility Warehouse has never charged a fee for customers to end standalone home phone contracts.  

Is your old home phone handset past its best? Check out the range of cordless phones to suit all tastes and budgets in the Which? cordless phones review.

New success follows BT phone win

In the same phone investigation that prompted Utility Warehouse's changes, Which? highlighted that BT was potentially breaking UK distance selling regulations by not providing sufficient cancellation rights when existing customers signed up to renewable contracts over the phone. 

BT has since amended its terms to comply with UK  law.

Which? phones expert Ceri Stanaway says: 'Our investigation highlighted consumer confusion prompted by widespread lack of transparency and clarity in home phone contract cancellation terms. But we were shocked to find that some companies' terms actually breached UK law or regulatory guidance. 

'We're delighted by the positive action taken by BT and Utility Warehouse in response to our findings, which makes the investigation a double success for Which? and for consumers.'

Find out how BT and Utility Warehouse measure to rivals such as TalkTalk and Virgin Media in the Which? reviews of home phone services and phone, internet and TV packages. 

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