Penalties for landline contract leavers slashed

Penalties for phone users who leave their landline contract early are to be slashed, Ofcom announced today.

The fees will be cut by up to 85% to reflect the costs providers save by no longer supplying the service, the communications regulator said.

Cheaper "early termination charges" will also apply to landline customers who receive broadband in the same package.

Ofcom said regulations meant consumers who ended contracts early should never have to pay more than the payments remaining, and should often pay less to reflect the savings to the provider.

Today's announcement follows an 18-month review by Ofcom to check BT, TalkTalk and Virgin Media were complying with the regulations.

The three providers did not believe their charges were unfair but had agreed to significantly reduce those applying to landline services, Ofcom said.

Under the agreement BT's early termination charge on its evening and weekend deal will drop from £7.50 to £2.50, down from £14.53 before Ofcom announced it was looking into the fees in December 2008.

TalkTalk's early termination charge for its evening and weekend package has already dropped from £14.44 to £3, and Virgin Media's fee on an equivalent package will fall from £11.99 to £4.

Virgin Media and BT will introduce the new charges in October, Ofcom said.

It expected other landline providers to reduce their charges to similar levels or face enforcement action.

Ofcom spokesman Peter Phillips said: "We very much welcome the reductions made by BT, TalkTalk and Virgin Media which mean that consumers will face much lower charges if they wish to end their contracts early."