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Telecoms firms must stop lumping "unfair" charges onto consumers' bills, according to new proposals put forward by Ofcom.

The UK regulator said penalties for paying by cash and cheque rather than direct debit, ending contracts early, or paying bills late should only reflect the charge to the operator rather than a way to get more money out of consumers and businesses.

Ofcom said its guidance, which covers landline, broadband, mobile and pay-TV providers, will ensure charges are "fair and transparent".

Under the proposals, providers will have to clearly advertise the cost of paying by cash or cheque, and the penalties for late or failed payments. Charges should only be made "after consumers have had a fair chance to pay their bills".

Contracts will also have to be more transparent, particularly regarding the cost of breaking a deal. A statement from Ofcom said: "A consumer who ends a contract early should never have to pay more than the payments left under the contract period - in fact they should often pay less than this, to reflect costs providers save because of their ability to recoup sums by selling services to other consumers."

Ofcom chief executive Ed Richards said: "Consumers are benefitting from greater competition and lower prices. But for consumers to get an all round fair deal they need to know the full costs of the services they are buying.

"Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is ncessary to include them. In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers."

Ofcom is seeking views on the guidance until 8 May. Once the guidance is published, providers will have three months to comply before enforcement under the Unfair Terms in Consumer Contract Regulations 1999. ®

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