Friday 25 May 2018

Consumers face penalties of up to €300 for leaving household utility contracts early

Consumers face penalties of up to €300 Thinkstock
Consumers face penalties of up to €300 Thinkstock

Charlie Weston Personal Finance Editor

The majority of Irish consumers are in the dark about early exit penalties on household utility contracts and this could be costing people dearly.

An analysis of exit fees by price comparison site shows that consumers face penalties of up to €300 for leaving a utility contract six months early.

But more than six out of 10 customers do not know that they will be penalised if they exit an electricity, gas or broadband contract early.

Around one in five consumers have been charged an exit fee in the past for getting out of a contract before the term is up, the survey found.

These people ended up paying an average of €180 to get out of a contract.

Eoin Clarke of urged consumers to take note of minimum terms, cooling-off periods and early exit fees.

Telecoms companies were found to be the worst offers. This is because it can be difficult to find the information on the websites of some of the providers.

Charges for cancelling telecoms contracts tend to be higher, reaching up to €300 for someone who cancels their contract with six months remaining.

Vodafone imposes an early-exit fee of €300 for cancelling its broadband deal six months before the end of the contract. A similar fee is imposed by broadband supplier Fastcom.

Unlike most energy deals, broadband, TV and phone plans often come with equipment such as set-top boxes, modems and handsets included.

Mr Clarke said this goes some way to explain the higher charges. It’s also worth noting that early exit fees are waived in certain circumstances.

Energy companies usually charge €50 for cancelling a contract early.

From next month new rules being imposed by the energy regulator mean that energy suppliers will have to give consumers 30 days’ notice before they come to the end of their contract.

Mr Clarke said: “Utility providers have an important role to play in ensuring that consumers are given clear and simple information about any early exit penalties.”

He added that consumers can help themselves by making sure that they read and understand their utility contracts.

And they should not allow uncertainty about exit penalties to stop them from shopping around. Householders could lose out on hundreds of euro each year if they stick with a supplier or contract that is too expensive and does not meet their needs, the managing director said.

“It’s vital that consumers have all the information they need to empower them to engage with the market,” Mr Clarke added.

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