Dear Simon, I have been a loyal BT customer for over 10 years, however recently I was tempted to switch my landline provider to a cheaper deal.
However when I tried to switch online, I received a letter from BT saying I was locked into a “rollover contract”, and I would have to pay a cancellation fee. What is a rollover contract, and how can I get out of it so I can save money on a cheaper deal?
Amanda Cowan, Sandhurst, via email, Monday 7 February, 2011
Hello Amanda, thanks for your email - I understand how frustrating it is to find that you can’t switch provider because you’re locked into a contract.
A number of landline providers, including BT (www.bt.com), offer rolling home phone contracts to customers, however new regulations mean it is now easier to get out of these contracts. To find out more about BT’s rollover contracts and how to get out of them, read my advice below:What is a rollover contract?
There are two types of rolling contract used by home phone providers in the UK:
Rolling contracts, or “automatically renewable contracts” as they are also know, are used by providers to lock a customer in for a minimum contract period. This is usually either 12 or 18 months. Once the minimum contract period has ended, the contract is automatically renewed, unless you tell your provider you want to be out of the contract. If you want to leave the contract after the minimum contract period is over, you must give 30 days notice to your provider.
BT, the UK’s largest home phone provider, also offers automatically renewing home phone contracts, called rollover contracts. These are similar to rolling contracts in that they will automatically renew after the minimum contract period has ended, however customers cannot leave after the initial “rollover”, and must wait until the new minimum contract period is met, or pay early termination charges.
These contracts have come under fire on numerous occasions and many consumers feel providers tie customers in unfairly, then charge them excessive fees to cancel the contract. Regulator Ofcom said “it has some concerns about rollover contracts,” and is looking into the practice - which it believes is only used by BT.
In the mean time, it has published clear guidelines on how much companies are allowed to charge you for cancelling your contract early, if you do get stuck in this situation.
Home phone suppliers have a duty to remind customers on automatically renewing contracts when you are coming to the end of the minimum contract period, as well as informing you of what you must do if you want to get out of your contract.
Ofcom says the reminder notice should:
If you end your contract after receiving the reminder notice, you will not incur any charges. However if you’re a BT customer on a rollover contract and want to end it before the minimum contract period is up, you will have to pay early termination charges.
Ofcom’s policy on early termination charges says customers should “never be charged more than the cost of the remaining contractual payments, less any savings the company makes from no longer supplying your service.”
Under the new charges, customers with phone-only packages from BT, TalkTalk and Virgin Media must pay fees of between £2 and £5 per outstanding month, depending on the package. Customers with a phone and broadband bundle from either TalkTalk or Virgin Media must pay no more than £8 or £9 respectively, per outstanding month.
So, if you’re a BT customer on its Evening & Weekend call plan with seven months left on your contract, you’ll have to pay just £17.50 to leave your contract, instead of the previous charge of £101.71.
Charges differ slightly between providers as the costs to the companies may vary. Full details of both former and new early termination charges are available on the Ofcom website
You’ll usually have to pay any early termination charges as a single lump sum at the point of ending your contract.
If you are worried that you have been locked into a rolling contract and not given the opportunity to opt out of it, you should:
Unfortunately there are currently no rules enforced to protect consumers who don’t receive the reminder notices in time to end their contracts, if it was lost in the post for example. However Ofcom is reviewing this.
If you’re having difficulties with your supplier about getting out of a rolling contract Amanda, you can contact Ofcom on 0300 123 3333 or 020 7981 3040.
If you have a general switching or provider query please get in touch with us here