Customers could receive GBP 25 per missed appointment if an engineer fails to turn up for a scheduled appointment or it is cancelled with less than 24 hours' notice.
Users connected through BT, Sky, TalkTalk, Virgin Media and Zen Internet - which Ofcom says is around 90 per cent of the United Kingdom population - are set to benefit, with Ofcom expecting Plusnet and EE to join as well.
Following a review earlier in the year, communications regulator Ofcom has set out new rules determining how broadband compensation will be distributed following the loss of service to residential customers.
While Plusnet and EE have not formally signed up to the new policy, Ofcom said both have "indicated they'd like to join the scheme".
"The risk of a financial penalty should encourage providers to step up and quickly solve problems rather than letting them drag out", he said.
Ofcom revealed that now only one in seven cases reported of broadband problems are compensated, usually in small amounts.
As for Sky, Capacity reached out for a statement but no official comment has been given.
"Waiting too long for your landline or broadband to be fixed is frustrating enough, without having to fight for compensation", Oxfom consumer group director Lindsey Fussel said.
"So providers will have to pay money back automatically, whenever repairs or installations don't happen on time, or an engineer doesn't turn up". There will be a 15-month implementation period before the scheme comes into force to give providers sufficient time to adapt their billing systems, online accounts and call centres.
And compensation will also be provided for delays when setting up a new phone or broadband connection. If one of the included ISPs says that your broadband or landline will be connected on a specific day and misses that date, then you'll get £5 for each day you aren't connected, including the missed starting date. Once it is all in place, Ofcom will be keeping an eye on things to ensure it is working.
Automatic compensation is something providers have "agreed" to, insinuating the commitment is voluntary on their part. The others include: ensuring lower charges for vulnerable landline customers, better information on broadband speeds before entering a contract, detailed information to show customer how different providers perform and fining companies for poor behaviour.
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