Roll-Over Contracts

Ofcom today confirmed that rollover contracts, which tie landline and broadband customers into repeated minimum contract periods unless they opt out, will be banned from December this year.

http://stakeholders.ofcom.org.uk/consultations/arcs/...

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



The full news release can be found on the Ofcom website.

<Sigh>. I've been on BT's voice ARC and they send you a reminder letter near the renewal date and make your options very clear. There were also other non-ARC contracts available just not quite as good a deal. It seems to me that all this does is remove an option that CPs had for selling cheaper contracts because a few people couldn't be bothered to read the small print when they signed up or ignored the letters that were sent to them.

Thanks, guys :-/

So, contract ends, BT could then stop service because the customer is "out of contract". The customer then needs to call up and agree a new contract ... Can you imagine the furore if BT did that - even though they will be perfectly entitled to do so.

Why should OFCOM effectively penalise BT just because people do not bother to read what they are sent, or remember what they wwere told and fail to act on the reminder letter that arrives a month before. I have two sitting on my desk.

didn't they also limit maximum contract lengths, making the "discount in return for commitment" quite hard to do now.

In reply to a post by yarwell:

didn't they also limit maximum contract lengths, making the "discount in return for commitment" quite hard to do now.

That's possible. I came off my ARC in Feb. this year. It was no longer the cheapest option.

In reply to a post by MHC:

BT could then stop service because the customer is "out of contract".

A common fallacy! You are never "out of contract"; you have just exceeded any minimum term and continue to be under contract indefinitely until either party legitimately terminates it.

@Andrue: Totally agree. This prohibition just panders to the lazy elements of the population, to the detriment of the rest of us getting a good deal by committing for longer.

That is my point ... BT can then legitimately stop service on day 366 with no notice whatsoever.

"Legitimately" is the operative word! They can only terminate under certain specific conditions in accordance with the provisions of the Agreement, like breach, misuse, bankruptcy, cease of phone line, complaint by 3rd party, ... They cannot terminate unilaterally just for the hell of it.

They certainly can - if you sign an agreement to take service for 12 months BT are agreeing to provide it for the same period and can terminate at the 12 month break point.

How much contractual experience - especially in the field of telecomms, do you have? Probably a lot less than I do.

In reply to a post by MHC:

They certainly can - if you sign an agreement to take service for 12 months BT are agreeing to provide it for the same period and can terminate at the 12 month break point.

BT are entitled to terminate the customer's service with 28 days notice at any time.

In reply to a post by MHC:

They certainly can - if you sign an agreement to take service for 12 months BT are agreeing to provide it for the same period and can terminate at the 12 month break point.

How much contractual experience - especially in the field of telecomms, do you have? Probably a lot less than I do.

Really, all they agree to is to supply a service for a set price for the set period of time, IMO the customer should always be given a choice of ARC or just min term then a rolling monthly contract, Car insurance is another area of ARC's and they will if you let em abuse the fact that they can access your bank account, as very rarely will they be offering the cheapest quote next time round, but with insurance the customer has to contact them and tell them they don't want ARC , which IMO is wrong, ARC's in my book are just a way they of getting extra revenue, yes there are a lot of clueless people out there who are easy meat for the likes of bt ect next maybe will be the abolition of any min contract about 12mths

I have reams of contractual experience. Those in telecoms are nothing special, Big head!

Or are telecoms contracts written in a lingo other than English?

When a renewable contract ends and you choose not to renew, you auto go on to the standard contract, e.g.:

If you do not wish to renew, all you need to do is let us know before the renewal date. If you choose not to renew your contract with us, you will then start to pay the standard monthly price for the Unlimited Evening and Weekend Plan, currently £16.90 per month including line rental if you pay by Direct Debit or monthly payment plan.

There is no provision for unilateral termination by BT.

Edited by XRaySpeX (Tue 13-Sep-11 19:10:10)

In reply to a post by XRaySpeX:

I have reams of contractual experience. Those in telecoms are nothing special, Big head!

When a renewable contract ends and you choose not to renew, you auto go on to the standard contract, e.g.:

If you do not wish to renew, all you need to do is let us know before the renewal date. If you choose not to renew your contract with us, you will then start to pay the standard monthly price for the Unlimited Evening and Weekend Plan, currently £16.90 per month including line rental if you pay by Direct Debit or monthly payment plan.

There is no provision for unilateral termination by BT.

Not to mention of course if they did terminate service, then that would be shooting themselves in the foot, and unless there was some real problem i very much doubt they would cut anyone off because they do not renew, when they as said will just revert to charging the standard price which in most cases will be higher, no a viable business idea that's for sure

In reply to a post by Oliver341:

BT are entitled to terminate the customer's service with 28 days notice at any time.

Your evidence for this statement? Show me where this is stated in any case.

I was reading a contract over the weekend that had the classic clause to terminate it:

'The company can terminate if it is uneconomic to continue.'

This was a national well known High Street organisation'

Good there is no good reason for auto renewing contracts. A minimum period is fair to allow providers to recoup up front costs but there is no valid reason for a contract to be renewed for a set period other than to deliberately lock people in who don't manage to cancel in the very short window where they have to cancel.

Congratulations Ofcom, finally something worthwhile that will protect less savvy consumers from rouge companies.

They are not banning Roll Over Contracts as such just those where you are automatically rolled over ie you have to opt out.

Contracts can roll over as long as it does not roll over automatically ie you have to Opt in

In reply to a post by XRaySpeX:

Your evidence for this statement? Show me where this is stated in any case.

"21.Once we have provided the service, you may tell us to stop providing it at any time by giving us 14 days' written notice, either by email to any email address we may have given you or by letter to the address on your last BT bill or any other address we have given you, for that purpose. We can stop providing the service by giving you 28 days' written notice."

http://www.productsandservices.bt.com/consumerProduc...

Edited by Oliver341 (Wed 14-Sep-11 14:54:07)

In reply to a post by Oliver341:

In reply to a post by MHC:

They certainly can - if you sign an agreement to take service for 12 months BT are agreeing to provide it for the same period and can terminate at the 12 month break point.

BT are entitled to terminate the customer's service with 28 days notice at any time.

indeed I am struggling to see whats wrong with this ban. Well it removes freedom for the seller to choose what they sell, but in all honesty rolling contracts I think are pretty bad. Commiting for say 12 months and then automtically going onto a monthly should be fine, at that point the customer has already been loyal and the seller should show some faith in both their own prodouct and the customer. If the seller needs to be locking in customers then it means they dont have much faith in their own product.

I personally think the BT line rental renewing contract is not a bad thing. Each year it can be renewed to get evening/weekend calls package for free for another 12 months. If you don't renew then you go onto a 1 month rolling contract that doesn't include free evening and weekend calls.

As long as you receive the notice that the auto renewal is coming up and can contact them to cancel it then I don't see the problem. If you remove the auto renew then each year you want to keep the free calls you have to contact to opt back in. Most people will probably keep renewing so this means more work for BT and the consumer to renew contracts than is currently involved for people not wanting to renew.

The ones I disagree with are those where there is no choice. You either go on another 12 month or more contract or your cancel your service. That is to me wrong as once you have served the minimum term for a product that is a standard provision you should not have to be tied back in for a longer period.

Contracts are generally to cover special offers and initial sign ups (top cover any startup costs). If neither of those are the case then you shouldn't be tied in for longer than 1 month.

In reply to a post by XRaySpeX:

I have reams of contractual experience. Those in telecoms are nothing special, Big head!

Or are telecoms contracts written in a lingo other than English?

When a renewable contract ends and you choose not to renew, you auto go on to the standard contract, e.g.:

If you do not wish to renew, all you need to do is let us know before the renewal date. If you choose not to renew your contract with us, you will then start to pay the standard monthly price for the Unlimited Evening and Weekend Plan, currently £16.90 per month including line rental if you pay by Direct Debit or monthly payment plan.

There is no provision for unilateral termination by BT.

Interesting, so your saying (using BT as an example) customer A could come to the end of their current rolling contract at a discounted rate and drop to a standard contract rate which will no doubt be higher than the one they were on in the first place?

Sounds like even more complaints coming then? Although I believe BT do contact you 30days before your current contract is up?

Is the the same/similar to car insurance letters you get at the end of your 12 months the "don't worry you don't have to do anything" ones?

Is the the same/similar to car insurance letters you get at the end of your 12 months the "don't worry you don't have to do anything" ones?

I would say it isn't the same as car renewal. With BT landline if you renew for another 12 month contract you get free evening and weekend calls. If you don't renew then you revert to their standard line rental charges for evening and weekend (at which point you could remove evening and weekend and go back to normal line rental).

With car insurance if you don't renew then you don't have insurance. There generally isn't a monthly rolling contract alternative.

In reply to a post by ian72:

Is the the same/similar to car insurance letters you get at the end of your 12 months the "don't worry you don't have to do anything" ones?

I would say it isn't the same as car renewal. With BT landline if you renew for another 12 month contract you get free evening and weekend calls. If you don't renew then you revert to their standard line rental charges for evening and weekend (at which point you could remove evening and weekend and go back to normal line rental).

With car insurance if you don't renew then you don't have insurance. There generally isn't a monthly rolling contract alternative.

I suppose it depends on your insurer, I'm pretty sure my car and home insurance requires no intervention and I get a letter when the 12 months is almost due showing the new rate and if I do nothing they take the money and we carry on.

Can't remember if that is still current to be honest but it certainly has been the case in the past.

Yes, that is how car insurance works. But you normally carry on as another 12 month contract - not as a rolling 1 month contract. If you don't take the 12 months then you don't get insurance (at least that's how all the ones I've used work).

However, it does seem there are more options to get out of a contract with car insurance. Not sure how that works but it does seem you get some money back if you cancel an insurance policy - so maybe it is different as with BT contracts you would have to buy yourself out of a contract.

Does anyone know if it is standard in car/house insurance to be able to cancel a contract and either get back the unused premiums if paid up front or not have to pay extra if paying monthly?

yes if there is a choice thats fine, but to me the default should be (when no choice is made), the monthly option.

With the insurance companies I am with, you have a period after the renewal (30 days I think) during which you can cancel and receive a full refund of premiums (as long as you have not claimed obviously). After the cool off period, you can cancel and get a pro-rata refund of unused premium, minus a cancellation/admin charge.

I think the cool off period during which you can cancel is mandatory.

Back to the phone, I did not have a rolling 12 month contract with BT for my line rental. I Initially had a 12 month contract, but that was not a rollover type. After the 12 months it reverted to a monthly contract. I still had all the free calls and benefits that the rolling contract had, only it cost me £1 or so more per month. But, the inital discount that I got when I took out the contract initally, was greater for that type of contract than it was by going for the 12 month rollover type (so overall I saved money). I could have committed myself to another 12 months at the end of the first 12 months and saved some money every month, but I did not want to tie myself in (which was a good decision as I have now moved to Sky).

In reply to a post by Chrysalis:

yes if there is a choice thats fine, but to me the default should be (when no choice is made), the monthly option.

What do you mean by 'default choice' though? Assuming you want a service from BT then you have to sign up for a specific package. You can't just say "gimme a phone service and I don't care how much it costs" so how can there be a default option.

The only time I'd have a problem with an ARC would be if:

* There was no alternate - ie;it's ARC or do without.
* You get put on an ARC without your express consent (or that you have to either move to ARC or the service is terminated).

I don't know about other telecoms providers but has BT ever done that?

BT are a little remiss in informing new subscribers that take the "free" evening and weekend calls that after the 12 months the contract would be auto renewed. Now as long as you get the letter that it is going to be auto renewed and action it if necessary then that isn't a problem. The problem was with people that apparently didn't get the letter and so didn't know that after their 12 months they were auto-enrolled for another 12 months.

I know BT are not good at making this known as one of my colleagues (a telecomms and networking person) has just moved house and signed up for BT landline and was not aware that there was an ARC (this was a couple of months back so before this announcement).

That to me suggests BT aren't clear.

Personally I have been with BT on this for 3 years now and have each time let it re-contract to keep the free calls as I use little in the way of calls and wouldn't save very much by moving to anyone else (and I still believe BT are about the best out there for dealing with landline faults).

In reply to a post by ian72:

The problem was with people that apparently didn't get the letter and so didn't know that after their 12 months they were auto-enrolled for another 12 months.

'Apparently' being the key word here, I suspect.

I know BT are not good at making this known as one of my colleagues (a telecomms and networking person) has just moved house and signed up for BT landline and was not aware that there was an ARC (this was a couple of months back so before this announcement).

Sorry but I don't buy that either. It was obvious to me that it was an ARC and the letter of confirmation stated it was an ARC.

You may not "buy it" but I had the conversation with my colleague this week and he was not aware that it was an ARC. That is a solid fact. It may be his fault but even if it is somewhere the communication failed between BT and him. That would suggest it was not clear enough for him to have noticed.

There were a number of reports on here of people not getting the reminder letters - I have always received them but I won't be drawn into calling others that have said they did not receive them liars as I take it on face value that they did not for whatever receive them (and if they didn't it could equally have been a problem with royal mail as with BT, but if you don't get the reminder then you won't know it is being renewed).

As a practice when parties are aware of it then no problem with it.

Problem is many people get so confused when dealing over the phone with these things, or don't read T&C's and if these stretch to a few pages do you blame them?

Also people may simply forget, and the reminder letter - given the level of junk mail, and that they know their bill is direct debit, many may ignore the post warning.

Comparisons to car insurance are different due to the legal requirements and costs of lapsing, so people generally pay more attention, but not always, e.g. recent issue where some did not get Certifcate of Insurance from Tesco and never noticed, i.e. policy was not actually running.