The new Ofcom rules come into effect tomorrow (15 February) and require companies to tell customers when their contract is up and what their best deals are.

With many people unaware if they’re in contract, phone, broadband and pay-TV companies will need to send an alert 10 – 40 days before their contract is due to expire.

The alerts – sent by text, email or letter – must include:

• when your contract is up
• what you’ve been paying until now, and what you’ll pay when your contract is up
• any notice period for leaving your provider
• your provider’s best deals, including any prices only available to new customers.

Anyone who is already out of contract must also be reminded they are out of contract, and told every year about their firm’s best deals.

Steep price rises

Ofcom said 20 million customers are outside of their lock-in period, with around 25,000 broadband customers reaching the end of their contract everyday, meaning they face steep charges once their current deal ends.

The move comes as Ofcom research last year found that out of contract broadband customers could save an average £100 a year by going on to a new deal with their existing provider.

And around three million could actually upgrade to a higher-speed package and pay less too.

Around 1.4 million mobile customers who pay for a handset and airtime package could save between £75 and £150 a year on average by switching to a SIM-only deal at the end of their existing deal.

Lindsey Fussell, Ofcom’s consumer group director, said: “Millions of people are out of contract right now and paying more than they need to. These new rules make it easier to grab a better deal.

“But you don’t need to wait to hear from your provider. Just a few minutes of your time could save you hundreds of pounds today.”

As part of its #InOrOut campaign, Ofcom wants to help encourage people to look for better deals in three steps:

• Check your account and see if you are out of contract
• Use a price comparison site to find the best deal in the market
• Contact your provider to see if they will match it.

Last year, Ofcom introduced rules allowing customers to walk away from their contract penalty-free if speeds drop below the level they were promised. It also introduced rules allowing mobile customers to switch operator by sending a free text message.