Ofcom bans automatic rollover contracts

Communications watchdog Ofcom is putting an end to rollover contracts (also known as Automatically Renewable Contracts, or ARCs) meaning that people won't be kept on minimum term deals for their landline or broadband deals without agreeing to it.

ARCs are a pain in the bum because often people will sign up to be on these deals when they first join a provider, although details of the inclusion are often hidden away in the small print. There's often a penalty for leaving within the period too, which usually rollover 12 months at a time.

Ofcom states that BT is the largest communications provider currently offering these contracts, with 15 per cent of UK residential consumers tied-in.

Ofcom chief executive, Ed Richards, said: "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."

ARCs will be banned from the end of this year, with people already signed up being moved to alternative deals, with a deadline of the end of next year for all the switches to be made.