A cap on the cost of bills from stolen mobile phones is to be introduced after the government reached agreement with four operators to end "shock bills", the culture secretary Maria Miller will announce.
As the government steps up its response to Labour's campaign on the cost of living, Miller will say that the four mobile phone companies have also agreed to stop unexpected price rises in the middle of a contract.
The agreement with EE, Three, Virgin Media and Vodafone is almost identical to the plans outlined last week by Helen Goodman, the shadow communications minister, who announced plans to end the "great phone rip-off".
Miller, who is accompanying the prime minister on his trade mission to China, will announce an agreement with the four mobile phone operators to:
– Cap bills on a phone that has been reported lost or stolen. A liability cap - similar to the £50 cap on credit and debit cards - should be in place by next spring.
– Stop unexpected mid-contract price rises by greater transparency on bills from the start of a contract. Customers would have the right to end a contract without penalty if a mid-contract price increase is proposed.
This follows a recent ruling by Ofcom, which said that increases to the "recurring monthly subscription charge" in a fixed-price deal would be regarded as "materially detrimental" to customers, the Daily Telegraph reported last month. Such increases will be banned from January 2014.
– Work with the government to work towards an EU target of eliminating roaming charges by 2016. BT, Sky and Talk Talk have accepted this part of the deal.
Miller said: "We are ensuring hardworking families are not hit with shock bills through no fault of their own. Families can be left struggling if carefully planned budgets are blown away by unexpected bills from a stolen mobile or a mid-contract price rise. This agreement with the telecoms companies will deliver real benefits to consumers and help ensure people are not hit with shock bills."
Ofcom was highly critical of mobile and broadband operators when it announced proposals to crack down on mid-contract price increases. Claudio Pollack, Ofcom's consumer group director, told the Telegraph: "Any increase to the monthly subscription price should trigger a consumers' right to leave their contract – without penalty."
The announcement by Miller follows the call by Labour for greater action. Helen Goodman called for the immediate banning of mid-contract price rises, a cap on bills from stolen phones, and easier switching between mobile phone providers.
Goodman told the Guardian last week: "Having a mobile or a fixed line should not be a luxury item – most people need them in their everyday life. It's time the government took action to protect consumers against the great phone rip-off."
Jo Swinson, the Liberal Democrat consumer affairs minister, said of the government announcement: "Most people now place large parts of their lives on their mobile phones - from friends and loved ones' numbers, to photos of great nights out. The last thing you need after the hassle of a stolen mobile is to find that someone has used it and landed you with a sky high bill too. Phone companies have listened to government and to their customers and I welcome their agreement to protect them from unexpected costs and mid-contract price rises."
