Published Tuesday 9th February 2021
BT are currently sending notifications of terms changes relating to inflation price increases for some of their contracts which will take affect from 1 April 2022 (CPI + 3.9%). Some suppliers have already made changes to their terms and inflation increases based on RPI or CPI will now be applied (you may be unaware of these changes if they were notified by a statement message you didn’t follow up on). This is the time of year when the big operators tend to apply their increases, often from 1st April.
The BT announcement we saw last week, unusually states that there may be a ‘material detriment’, which allows 30 days notice to be given from receipt of the notice, to cancel without penalty. In most cases this is insufficient to carry out a review and change supplier if not already considered and termination charges may still apply if services are cancelled which are not included in the terms change, so really there is no choice but to accept the change or make a hasty decision.
The sensible thing to do is undertake a review of all Telecoms contracts/terms and determine a plan for the future to minimise costs and improve telephony systems at the same time if that is required.
There does not seem to be any consistency in whether RPI or CPI is used, but RPI is currently about 1% higher. In 2013, the RPI lost its status as a National Statistic as ONS do not think it is a good measure of inflation and discourages its use although it is still maintained for reasons set out in their Mar-18 article exploring the shortcomings of the RPI. We recently came across another suppliers’ contract which allows annual price increases by CPI + up to 10% (will they use the clause?), so it is advisable to remain up to date on your commitments as they may well have changed since you signed the contract and you may well have more than one set of terms covering your services and not know it, until you want to make changes.
Get in touch if you would like to discuss your telecoms.
About the Author: John Trimble, is a Chartered Accountant, Certified Information Systems Auditor and formerly a Fellow of the Institute of Internal Auditors with extensive experience in technology, business processes, risk and control, security, compliance, project management and supplier ‘control’.