Monday, 28 November 2011

Prohibition against selling new Automatically Renewable Contracts

In a statement published on 13th September 2011 Ofcom confirmed that telephone and broadband rollover contracts, which tie customers into repeated minimum term contract periods unless they opt out, will be banned from December this year.

These types of contract, which are also known as Automatically Renewable Contracts (ARCs), roll forward to a new minimum contract period unless the customer actively opts out of the renewal. These contracts also have penalties for leaving early. The ban on selling Automatically Renewable Contracts (ARCs) will apply to landline and broadband services sold to domestic (residential) and small business customers.

The ban against selling new Automatically Renewable Contracts (ARCs) to customers comes into effect on the 31 December 2011 and all existing ARCS have to be moved off the renewable contract type by the 31 December 2012.

This ban affects the sale of ARCs to residential and small business customers. The requirements go on to define a small business and domestic customers as:

“domestic and small business customer”, in relation to a public communications provider, means a customer of that provider who is neither —

(a) himself a communications provider; nor

(b )a person who is such a customer in respect of an undertaking carried on by him for which more than ten individuals work (whether as employees or volunteers or otherwise).

So it is only companies with less than 10 employees that this will effect at present

For more information on who this legislation applies to download the Ofcom Guidance here

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