Autumn Budget 2025: Chancellor asks regulator to review 30-day telecoms cancellation rule after Martin Lewis called for urgent intervention
The Chancellor has written to regulator Ofcom – as well as to major telecoms providers – over unannounced mid-contract price hikes. It comes after MoneySavingExpert.com founder Martin Lewis wrote to Rachel Reeves in October calling for urgent action to strengthen consumers' cancellation rights.
MSE's Autumn Budget 2025 coverage
Check out all of our other MSE News stories following the Chancellor's announcements:
Full round-up of the key measures, including MoneySavingExpert.com founder Martin Lewis's video analysis of what they mean for you.
The cash ISA limit will be cut to £12,000 a year from April 2027 – but only for those under 65, as Martin called for. We explain what's happening.
£150 will be cut from energy bills from April 2026. Martin has pushed for this to include households on fixes.
The salary sacrifice pension perk is to be capped at £2,000 a year from April 2029. We explain what's changing.
Ofcom introduced new rules in January 2025 requiring telecoms providers to show annual bill rises in pounds and pence before customers sign up. But in October, O2 announced that all existing customers would see their bills rise by 40% more than they were originally told, with monthly mid-contract price hikes increasing from £1.80 to £2.50 from April 2026.
Martin, who has previously called the move a "mockery of Ofcom's rules", wrote to both the Chancellor and technology secretary Liz Kendall, and put forward three suggestions to remedy the issue.
This included calling for the 30-day notice period during which affected customers are allowed to leave penalty-free to be extended to two 30-day windows: one when they're first made aware of the price increase and the second when the price hike actually comes into effect.
The Chancellor writes to Ofcom over mid-contract price hikes
In the Budget document, it says the Government is "committed to protecting consumers, so they are treated fairly, including in the telecoms sector, where the Chancellor and the Secretary of State for Science, Innovation and Technology are working alongside Ofcom to ensure customers get a fair deal and are able to switch provider easily".
The Chancellor has now written to Ofcom asking for it to review the "suitability" of the current 30-day rule. The letter also asks the regulator to produce an interim review of the impact of the January changes by Spring 2026. Here's a copy of the Chancellor's letter to Ofcom in full, sent on Tuesday 25 November:
Melanie Dawes
CEO, Ofcom
Dear Melanie,
Telecoms pricing regulation
We are writing in light of recent developments in the telecoms market concerning mid-contract price rises, and the important role Ofcom continues to play in protecting consumers in this sector. This builds on correspondence you have already exchanged with the DSIT Secretary of State.
We welcome the action Ofcom took in January to increase transparency around how in-contract price changes are presented to customers entering new contracts, and note your recent statement expressing disappointment with O2's decision to increase prices. We share your concern that these price rises run counter to the spirit of your previous regulatory changes, and are particularly disappointing in the context of ongoing cost of living challenges facing many consumers.
As you are aware, inflation remains a key challenge for the government, and we are determined to bear down on it wherever possible. The impact of rising costs on consumers, including in essential services such as telecoms, must be minimised.
The DSIT Secretary of State wrote to you recently requesting an assessment of the impact of the January rule change, as well as consideration of further measures to strengthen consumer protections and transparency in pricing. HM Treasury supports this approach, and we understand that Ofcom is due to publish a report in February outlining trends in switching across telecoms services, as well as data on consumer engagement and confidence in the market.
Building on this work, we would ask that Ofcom produces an interim review of the impact of the January 2025 changes by spring 2026 with a full review due in 2027.
Separately, we would also ask that Ofcom review the suitability of the current 30-day notice period rule.
Specifically, we would welcome Ofcom's assessment on whether the current rule sufficiently enables consumers to exit their contracts at the point when a price increase takes effect. As we are sure you would agree, it is vital that customers can move to other providers as easily as possible in the face of uncontracted price increases.
This government is keen to play a convening role with industry to underline the importance we attach to these issues. We will be seeking voluntary commitments from industry to protect consumers from unfair pricing practices and would be grateful for Ofcom's support in the coming weeks regarding this.
Ensuring fairness in the telecoms market is vital to supporting consumers and maintaining trust in the sector. Our officials stand ready to discuss these matters further, we are open to further suggestions you may have to improve consumer outcomes in this sector.
Rt Hon Rachel Reeves MP
Chancellor of the Exchequer
The Chancellor has also asked major telecoms providers to 'ensure customers are treated fairly'
In a separate letter from the Chancellor to the major telecoms providers, it says the Government will be convening a roundtable to discuss how consumers can be supported further, and it asks providers to:
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Reinforce commitments to treating customers fairly – including by confirming that customers under contract will not face price rises beyond those that they signed up to.
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Take proactive steps to move legacy customers onto the pounds and pence approach for communicating price changes, with no impact on the timing of planned price increases.
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Ensure consumers have a clear and accurate understanding of the quality of service they should expect from their provider.
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