Shares in BT and Vodafone fell after the telecoms regulator moved to outlaw price hikes linked to inflation on broadband and mobile bills.
Ofcom said mid-contract rises – typically the rate of inflation plus 3.9 percentage points – were unfair on customers and hampered competition.
The watchdog plans to force companies to write future price rises into contracts – in pounds and pence rather than percentages linked to inflation – at the point of sale.
Shares in BT fell 3.9 per cent and Vodafone lost 2.1 per cent as the regulate change looked set to leave telecoms groups on the hook if inflation suddenly soars as it has done in recent years.
Telefonica, which owns O2 UK, fell 1.7per cent in Madrid.
Ofcom said mid-phone contract rises – typically the rate of inflation plus 3.9 percentage points – were unfair on customers and hampered competition
Ofcom chief executive Dame Melanie Dawes said: ‘Most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.
‘Our tougher protections would ban this practice once and for all, giving customers the clarity and certainty they need.’
Matthew Upton at Citizens Advice said: ‘Banning inflation-linked, mid-contract price rises is a much-needed proceed from Ofcom.
‘But these proposals still leave the door open to providers putting “prices may vary” small print in their contracts.’
BT said it has always followed the guidance given by Ofcom.
