Costs fall for phone contract cancellations

On the 17 June, Ofcom announced that it had come to an agreement with three of the biggest UK landline phone companies to cut charges for early termination of contract. BT, Virgin Media and TalkTalk have all agreed to significantly reduce the charges that they apply when a customer gives notice.

Those customers wanting to leave TalkTalk will benefit immediately whilst customers of the other two providers will have to wait until October to benefit.

Ofcom has also announced that it expects other landline providers to make similar cuts in their charges or face enforcement action. The changes will apply to landline packages as well combined landline & broadband packages.

These cuts in charges of up to 85% will be welcomed by consumers. Not only will those moving premises save costs but the cheaper charges gives customers greater freedom to move away from providers who overcharge or give poor service. An uSwitch customer satisfaction survey in February of this year showed overall customer satisfaction ranging from between 71% to 86% for the top four companies. Alarmingly, the perception of whether clients thought their current contract represented the best deal only ranged from 41% to 59%. These results were lower than those for 2009 showing increasing dissatisfaction among phone customers of the top four for the service they receive.

Ofcom brought the cuts in as a result of its interpretation of the “Unfair Terms in Consumer Contract Regulations 1999”. It considered that consumers should not have to pay additional charges if they terminated a contract early as the phone companies would benefit from not having to service that contract. Given the customer satisfaction ratings for the top four, the lower charges are likely to encourage consumers to look around and switch to providers who offer higher levels of satisfaction.

Of course, in an ideal world, other telecommunication companies would follow the lead set by Callagenix and charge on a pay as you go basis. We recognise that the business world moves fast and needs change. Because of this we have a completely flexible approach to services. Whether you need a virtual switchboard or an answer phone service, a new phone number or a competition line, we charge you on a pay as you go rate. We even let prospective clients try our phone service for free before they sign up. We don’t need to charge someone to leave, we believe in providing excellent service so that they stay.