Money Saving Expert founder Martin Lewis has told customers of all broadband firms that they could be hit with higher price rises than before thanks to a change in the law. Martin told his Martin Lewis Podcast listeners that ‘Sky isn’t telling you this’ but that it actually now allows customers to leave its contracts mid-contract when prices go up following the law change – and that customers of other firms could end up paying even more under the new rules, too.
In January, telecoms regulator Ofcom brought in new rules on mobile and broadband contracts which banned mid-contract price rises based on inflation, and instead forces companies to give customers a figure in pounds and pence up front which sets out how much your price will rise during the contract.
Sky, however, has chosen not to follow that rule and has stuck with a percentage-based system, which means customers are free to leave with 30 days’ notice instead if the price goes up mid-contract.
But even those who are on the new pounds and pence system might end up paying more than before, Martin warned.
Speaking on his April 2 podcast via BBC Sounds and Spotify, Martin Lewis said: “We have had a change in the regulations on this. Most people are seeing price hikes of around 5 to 7% this year. But, new rules have come in that say on new mobile and broadband contracts, they cannot do mid-contract price hikes. They have to tell you how much the price will rise before you start your contract.
“The only exception is if they choose not to do that and choose to do a mid-contract price hike, that you’re allowed to leave within 30 days of the notification of that, penalty-free, which is the one Sky is choosing to do.
“Sky isn’t telling you this but Sky is letting you – and it actually gets some competitive advantage because therefore its headline prices are cheaper on price comparison websites by doing that which I think might distort the market and they might need to look at it.”
Martin continued: “My problem is, they’re still allowed to increase the price mid-contract, they’re still allowed to increase it above inflation, they just can’t link it to inflation.
“And what we’re perversely seeing is, these pounds and pence rises are more transparent but for many people, especially those on relatively cheap deals, they’re bigger than the old inflationary price hikes.
“If you’re on £20 a month and your rise is £3 that’s 15%, whereas on the old inflation system you would have been on 5 or 7%.”
Martin added that he submitted to the government that there should be a moratorium on prices rising above inflation during the contract.
He added: “I mean it’s a contract. A fair contract would be that you can put it up by inflation. But that’s not what they’ve chosen to do. I’m not in charge.”
A letter from Sky’s Chief Operating Officer Devesh Raj, issued in January, said: “This April, we will be introducing some changes to prices of Sky’s TV and broadband products.
“I wanted to take this opportunity to explain to our customers why this decision is necessary and why we’re always committed to offering you excellent value.
“At Sky, everything we do is focused on bringing people the joy of a better experience. Whether it’s award-winning content, world-class sports coverage, or reliable broadband, we strive to provide an offering that sets us apart. I’m proud to say we’ve invested heavily over the last 12 months, so our customers now have access to more than ever before.
“This continued investment to deliver the best and most reliable products, along with increased supplier costs, means most of our TV and broadband customers will see a change in their price this year. But we’ve made every effort to minimise the financial impact to you.”
Sky added in the letter: “From April, our TV and broadband packages will increase by an average of 6.2%, which is either in line with or lower than other providers. Over the last four years, our prices have broadly increased in line with inflation, reflecting our ongoing commitment to fair and transparent pricing.
“I’m pleased to confirm that the cost of our broadband and mobile social tariff will be frozen once again, protecting our most vulnerable customers and ensuring they continue to have access to essential services.
“We will be reaching out to every customer impacted in the coming weeks, to provide clarity about how their products and services will be affected.
“These price adjustments are reflected in the investments we’ve made to improve our products and services and the heightened pressures businesses across our industry continue to face. For example, the amount we pay wholesalers for our broadband infrastructure or the investments we need to make in technology to deliver product reliability and improvements for our customers.”
When your prices go up, you can contact Sky to cancel instantly within 30 days and switch to another provider, even if you’re mid contract. This applies to broadband prices specifically, as TV packages aren’t covered in the rules. Essential TV is also not subject to a price rise.
