Phone and broadband firms to be forced to tell customers if they could be on cheaper deals under new rules

Broadband, TV, mobile and home phone companies will have to tell customers when their contract is coming to an end and show them the best deals available under new rules unveiled by Ofcom.

The telecoms regulator said the move, the latest in its Fairness for customers programme, could see up to 20 million customers benefit by switching provider or agreeing a new deal with their existing one.

Ofcom said people who bundle their landline and broadband services together pay on average around 20% more when they are out of contract and this rises to 26% among customers who bundle in their pay-TV services.

It said that around one in seven customers do not know whether they are still tied to the original deal.

Ofcom's consumer group director Lindsey Fussell said: "We're making sure customers are treated fairly, by making companies give them the information they need, when they need it.

"This will put power in the hands of millions of people who're paying more than necessary when they're no longer tied to a contract."

The changes will involve providers sending tailored information to millions of individual customers, including the contract end date, the price before this date, any proposed changes and the best deals offered by their provider.

Ofcom said the new rules would not come into force until February 15 next year, giving companies nine months to make the necessary changes to their systems and processes to make sure they "get this right".

Last year, The Telegraph reported how phone and broadband customers would soon receive alerts telling them when they have reached the end of their contract under a crackdown being planned by regulators.

At present most providers do not inform customers when their terms are up and they could switch to a cheaper deal.

Every year at least six million loyal mobile phone contract holders are being charged for mobile phones they have already paid for, Citizens Advice analysis shows.

Customers are unaware they are being charged for handsets after their contracts have ended, as providers do not tell them they have finished paying off the cost of the phone and only need to continue paying for calls, texts and data.

On average, those customers pay an unnecessary £22 a month which rises to £38 extra for smartphones. One in five customers only realise after six months, by which time they will be £228 worse off.

Similarly most broadband providers quietly move customers onto a more expensive tariff when their contract is up, leading to them unwittingly paying over the odds.

An estimated 15 million households are currently out of contract with their broadband provider, or around a third of all customers.