Consumer Scotland responds to CAP and BCAP consultation on mid-contract price rise ads

Consumer Scotland has responded to a consultation by the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP) on new guidance for presenting mid-contract price rises in broadband and mobile advertising. The response was published on 15 September 2022¹.

The statutory body for consumers in Scotland, established on 1 April 2022 under the Consumer Scotland Act 2020 and accountable to the Scottish Parliament, said it welcomed the proposals in principle¹. The consultation concerns ads for telecoms services that include, or could include, mid-contract price increases, and whether they comply with CAP and BCAP rules against misleading advertising, including by not omitting material information¹.

On the level of prominence expected for information about mid-contract increases, Consumer Scotland said it was satisfied that the additional risk presented by potential monthly price increases in a variable contract is offset by the opportunity for affected consumers to terminate at short notice without penalty, and agreed the proposed guidance should suffice across the board¹. It suggested providers could be encouraged to give any available details alongside the phrase "(price may rise during contract)" in the small print, such as a minimum or maximum percentage increase per change or a contributing factor¹.

On inflation terminology, the response said including both the full name and the acronym, as "Consumer Price Index (CPI)" and "Retail Price Index (RPI)", would help consumers investigate further if they wish¹. It said many consumers may have only a limited understanding of these terms, and that consideration should be given to signposting consumers towards sources of independent consumer advice¹. It suggested exploring whether only CPI should be used, as that is likely to be the term consumers encounter most, and said the guidance's expectation that initialisms like RPI are written out in full the first time and appended with "rate of inflation" should be a solid requirement¹.

The response also said drawing additional attention to pricing with suggestive terms such as "only" seems counterintuitive and would defeat the purpose of promoting careful consideration¹. It agreed that where multiple offers appear on one page, a link or reference to a single suitably prominent piece of information about mid-contract price increases may be sufficient, as long as it is clearly visible and states that it applies to each and every product, service and contract advertised¹. Consumer Scotland said it would welcome extension of the guidelines to business-to-business advertising, noting that small businesses with 0 to 49 employees accounted for 98.2% of all private sector businesses in Scotland, 42.4% of private sector employment and 26.7% of private sector turnover as of March 2021¹.

Why it matters for households

Broadband and mobile contracts often include mid-term increases in the monthly price, and the consultation concerns how clearly ads must flag them¹. The response sets out the economic backdrop: it cites inflation reaching 11.1% in October, real incomes predicted to fall by 2% in 2023-2024 on top of a 4% fall predicted for 2022-2023 for non-pensioners, and an Institute for Fiscal Studies prediction in August that the poorest fifth will face an 18% inflation rate in October 2022 compared with 11% for the richest fifth¹. It also cites homeworking in the UK rising from 4.7 million to 9.9 million people between December 2019 and March 2022, with the largest percentage increase in Scotland at 203.5%, up 544,000¹. Consumer Scotland says employers often do not pay for home broadband or for mobiles used for business calls, increasing the importance of affordable contracts¹. The guidance, if adopted, would apply across a variety of media and cover both tiered and variable contract types¹.

What happens next

The response was submitted by email to CAP and BCAP on 15 September 2022¹. No date for publication of final guidance, or for any decision on the points raised, has been reported¹.