TalkTalk has sparked a row with BT by accusing it of "sharp practice" over its contract renewals policy, which aims to tie customers in for an extra year or even 18 months.
It's about a year since BT adopted a rolling contract policy. If subscribers coming to the end of their initial term do not notify BT they want to leave, they'll automatically be signed up for another term. If they subsequently want to leave, customers face a financial penalty of "up to £180", TalkTalk claimed.
Andrew Heaney, TalkTalk's strategy and regulation director, said: "We believe that rolling contracts are a sharp practice at any time, but particularly so in the current credit crunch and with given the riches available in the market. We would like to see these unfair rolling contracts stamped out and have already called upon Ofcom to take a firm line in this area."
BT said customers choose to extend their contracts because they are offered good deals. "We meet Ofcom's requirements," spokesman Leslie King said. "I don't know how they came to a figure of £180. It's totally inaccurate."
BT also sent this statement:
Customers have a clear choice on whether they want to opt in to a renewable contract in exchange for the considerable benefit of free evening calls. They are very clearly reminded in writing with around 30 days notice when their contract is coming up for renewal that they will be entering into a new 12-month period unless say that they do not wish to do so.
Many other services, such as magazine subscriptions, insurance, car breakdown services are contracted in similar ways.
But Heaney continued his attack: "BT cynically places the onus on its customers to cancel their contracts – simply because it knows that many of them will simply forget."
Ofcom said BT and other communications providers have until April 1 this year to comply with its guidance on contract terms or face a review under the Unfair Terms in Consumer Contract Regulations. A spokeswoman said: "Ofcom does have some concerns over the automatic renewal of contracts if it means that consumers are subject to unintentionally long and recurring contracts. Ofcom will open an enforcement programme and will take action where necessary."
BT reiterated that it believes it is complying with Ofcom's rules and that its customers are exchanging a longer contract for a better deal. ®