Ofcom has announced that broadband and landline contracts that automatically roll-over after the minimum contract period has ended unless Brits opt-out, are to be banned from December.
Automatically Renewable Contracts (ARCs) kick in if customers do not actively opt out, and impose penalties if users want to move to another service provider.
Ofcom estimates that around 15% of UK residential customers are on such rollover contracts.
The regulator said BT, Adept Telecom, Axis Telecom, Eze Talk and iTalk were among providers currently offering the contracts.
In addition, TalkTalk Business, Titan Telecoms and Optimum Calls offer ARCs to business users.
“Ofcom’s evidence shows that ARCs raise barriers to effective competition by locking customers into long term deals with little additional benefit. Our concern about the effect of ARCs and other ‘lock in’ mechanisms led to our decision to ban them in the communications sector,” said chief executive, Ed Richards.
Other residential providers include Adept Telecom, Axis Telecom, , Ofcom’s chief executive Ed Richards said: “ARCs raise barriers to effective competition by locking customers into long-term deals with little additional benefit.”
The sale of such contracts will be banned from 31 December.