Home phone contracts - your questions answered
- Confused by the small print? Which? answers your questions about home phone contracts
- Early termination fees explained plus how much you should expect to pay if you end your contract early
- How renewable contracts work and how to avoid getting caught out
How much is a phone or broadband provider allowed to charge me to end my contract early?
Ofcom guidance on early termination fees states that cancellation fees should never exceed the cost of the remaining contractual payments, less any savings the company makes from no longer supplying your service.
When we looked at how much it would cost to end phone or phone/broadband contracts early in early 2010, we found that charges varied considerably by provider. Most charge less than the full cost of remaining contractual payments but, depending on your provider and how far into your contract you are, early termination fees could still exceed £100.
You’ll usually have to pay early termination charges as a single lump sum at the point of ending your contract.
What is phone regulator Ofcom doing to make early termination fees fair?
In June 2010 Ofcom announced that following more than a year of negotiations, BT, TalkTalk and Virgin Media have agreed to cut their early termination fees for their standalone home phone contracts significantly. TalkTalk and Virgin Media are also cutting early termination fees for their phone and broadband bundles.
Ofcom expects rival home phone providers to follow suit or face enforcement action.
Ofcom has not yet made any announcements regarding early termination fees for standalone broadband, pay-TV or mobile phone contracts, but it says it is continuing its work to ensure consumers pay fairer early termination charges across all communications services.
How can I find out how much it would cost me to end my home phone contract or phone/broadband bundle early?
We found that with many leading home phone providers, it was almost impossible to find out details of how much it would cost to end your contract early on company websites.
Even if you can find the right terms and conditions buried in the small print, the wording is often vague and unclear.
If you want details for your own contract, your best bet is to ask your provider directly.
We think that phone and broadband providers should make their cancellation terms fair, easy to find and clear, with worked examples.
Do all home phone and phone/broadband bundle providers charge early termination fees if you end your contract early?
Most leading standalone home phone providers and almost all leading phone/broadband bundle providers we looked at charge a fee to end your contract early.
However, neither the Post Office nor Utility Warehouse charges a cancellation fee for their standalone home phone services.
Will I have to pay an early termination fee if I have to end my phone or phone/broadband bundle contract early for reasons outside my control, such as moving house?
If you use the same provider and it’s able to supply a service at your new address, you won’t have to pay early termination fees.
However, you’ll probably have to restart your contract tie-in from scratch and in some cases you may be charged a fee for moving house.
If you choose not to transfer the service to your new address, you’ll usually have to pay an early termination fee.
A few providers may waive early termination fees if they’re unable to supply a service at your new address – this may be on a case-by-case basis.
Would I have to pay an early termination fee to end my mobile phone or broadband contract early?
We haven’t yet looked into early termination fees for mobile contracts, but in most cases you’re likely to have to pay an early termination fee to end your mobile phone contract early. Early termination fees may apply even if you move to a new address where you can’t get a mobile signal.
You can find out how much it would cost to end your broadband contract early in the Which? broadband review.
The review also gives details of broadband ISPs, including a Which? Best Buy broadband provider, that offer one-month contracts with no early termination fees.
Can I ever cancel my phone or broadband contract early without paying an early termination fee?
There are a couple of circumstances where you can legally end your contract with a provider without having to pay an early termination fee:
- If you’ve signed up online or by phone and end your contract within the short period allowed under distance selling regulations. Distance selling regulations give you seven working days starting the day after purchase to change your mind and end your contract. Some providers may voluntarily offer a longer period to change your mind – check before you buy. If you haven't been given certain information in writing or by email at the point of purchase, you could have longer under distance selling regulations – a minimum of seven working days starting the day after you receive the information in writing. You can waive your right to cancel if you want the service to start immediately, but only if the supplier has already provided certain information in writing. Written details must include the consequence of agreeing to the service starting before the cancellation period has ended.
- If your provider increases its charges significantly or changes your deal in a way that is of ‘material detriment’ to you, you can usually cancel the contract without penalty within a month of being notified. However, this won’t apply if the increase is no more than an increase in the Retail Price Index (RPI), the official measure of cost-of-living increases.
What is a ‘renewable’ contract?
With a renewable contract, once your initial tie-in ends it’s automatically renewed for the same period (such as 12 months) unless you actively cancel in advance. Otherwise you’re locked in again for another year or more and must pay early termination fees to break your contract.
Phone regulator Ofcom says that companies that offer renewable contracts must make the terms of the contract clear before a customer signs up. Companies must also remind consumers when they’re coming to the end of their tie-in and what to do if they don’t want the contract to be renewed.
Which? is concerned that companies that offer renewable contracts don’t always make the terms clear before customers sign up. We also think that placing the burden of actively opting out of a renewable contract on the consumer is unfair – we’d like companies to contact customers to ask them to opt in for another term instead.
Which phone providers offer renewable contracts?
The only large provider we know of to offer renewable contracts is BT. On its most popular renewable deal, you get free evening calls (otherwise £2.99 a month) in exchange for signing up to a 12-month renewable contract.
If you break BT’s contract part way through one of its renewable tie-ins, you must pay a fixed fee per month for each month remaining of your contract.
Other smaller providers that offer renewable contracts include Axis Telecom, AdEPT Telecom and eZe-Talk.
How can I complain about my phone or broadband provider?
In the first instance, complaints about your home phone, broadband or mobile provider should go through the company’s internal complaints procedure. Keep detailed records of all phone calls, emails and letters.
If you can’t resolve the problem with your provider, after eight weeks from the date of the original complaint (verbal or written), you can ask for either the telecommunications ombudsman (Otelo), or the Communications and Internet Services Adjudication Scheme (Cisas) to intervene.
Every broadband and phone provider must belong to one of these complaints schemes – you can find out which one your provider belongs to on the Otelo and Cisas websites.
For complaints about your broadband provider you can also try the Internet Service Providers Association (ISPA), if your ISP is a member.
Find out which phone and broadband providers have the happiest customers in the Which? review of phone, internet and TV packages.