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O2 joins the party with its price hike – are you affected?

Bubbles rising

And so the last of the big five mobile phone providers has followed the others by announcing a price rise for its existing pay monthly customers. From 28 February watch your O2 bills sneak up.

As many a Convo commenter will know, O2 is not alone in the price hike move. It was only last month that we ‘celebrated’ the first year anniversary of Orange announcing its price hike. Now O2 would like to join the party.

O2’s increasing its mobile line rental by 3.2% (current inflation rate) from 28 February 2013. You’ll only be affected if you’re on a pay monthly contract (pay-as-you-go customers are exempt), but this might make the hike harder to digest as most would think a contract comes at a fixed price.

It’s due to companies’ unfair price hikes and more than 2,000 comments that we launched our Fixed Means Fixed campaign calling for fixed to really mean fixed.

O2 price rise added to your mobile phone bill

O2 points out that for individuals, the price rise isn’t huge. For example, if you’re on its £31 a month tariff, you’ll see an increase of 99p a month or nearly £12 a year. Still, it’s the principle of the thing – fixed means fixed doesn’t it? Plus, we’ve worked out that collectively O2’s customers will pay almost £45m more a year on the back of this increase.

In many of our Conversations on mobile price rises, commenters have consistently pointed to O2 as being the only major provider not to increase its prices – and it has lasted some time despite others raising prices earlier this year. JayMusgraev gave O2 kudos for keeping its prices in check prior to the hike: ‘Seems that O2 could steal a march on their competitors’.

Until now O2 has publicly stated that it had no plans to put its prices up, indeed it has made a virtue of this. And yet, it had the same clause buried in its contract as all the other mobile providers. This clause says prices can go up every 12 months as long as this isn’t higher than the current RPI rate of inflation. We asked O2, along with the other providers, to remove this clause and they refused. Now we can see why.

Remove price rise terms from contracts

O2 says it’s giving you ‘maximum’ notice of the price rise by telling you by 17 December 2012 before implementing the rise on 28 February 2013. All current customers, whether you’re new to O2 or have been with the provider for a while, are affected. An O2 spokesperson told us:

‘Price increases are never welcome and this isn’t a decision we’ve taken lightly. At a time when our competitors have been raising the prices of their tariffs, we’ve resisted. But as external costs continue to rise, we can’t keep our pay monthly prices at the current level. For over half of our pay monthly customers this will mean an increase on their bill of up to 58 pence per month.’

This is why we need a change in the industry – these clauses need to be removed so that we know prices won’t go up when we sign on the dotted line. We hope Ofcom will act swiftly to ensure mobile phone companies are made to drop hidden clauses in their contracts that allow them to hit consumers with millions of pounds worth of unexpected price increases.

Comments
Sam Wardill says:
7 January 2013

O2 have responded to my letter before action to say they “will not be offering to waive the price increase or terminate your contract without penalty. This is our final position.” @Patrick Steen – Are you able to advise: Should I lodge my small claim now or should I wait for the remainder of the 14 days to elapse that I originally gave them to change their mind in my letter before action?

Sam Wardill says:
7 January 2013

@patrick I get your point about taking legal advice. I’m not sure about your advice relating to going back to the ombudsman. If I go back to the ombudsman with a different argument do you think they might take on my case? In my case O2 did send me an instant message with a link to the ts and cs and I confirmed I read them so no argument there.

Tyler says:
8 January 2013

Can i just point out that the T&Cs consider deprimental (is that the word?) damage as a certain pertentage… However my Sky, my gas and electric, all state the same thing- if they all put their prices up at once then of course its deprimental damage!!

Frank says:
9 January 2013

Hello Patrick, I’ve looked through my Tesco/O2 agreement, particularly Paragraph(s) 5, Charges for Service and the contract does not mention RPI anywhere.
I had to use reading specs and a magnifying glass because the text is so small – approx 1.0mm which is a point size of about 2.6! I also enlarged it on my copier.
Paragraph 11, Changes to the Agreement states: We may change this Agreement and the Charge at any time. If we increase the charges for the elements of the Service you are using or change the Agreement to your disadvantage we will give you 30 days notice before the changes take place.

It seems to me that as per my earlier post, 8.4c still holds good.

Thanks, Frank

Mission Impossible? says:
11 January 2013

David floors Goliath … more to follow 😉

Claire lavery says:
13 January 2013

My bill is going up by £16 a year shocking. They’re not interested.

O2 new subscriber says:
14 January 2013

I’ve just subscribed to a 24-month contract with O2 and they’ve sent me a “welcome to O2” notice with the unwelcome news that they’re proposing to raise the amount which I agreed to pay by 3.2%. On reading their terms and conditions, I see that they are only entitled to raise the charges by the RPI at the date that they notify me of the change. As the “current” RPI (i.e. the latest RPI published by ONS) is that for November 2012, which was 3.0%, they are actually proposing to raise my charges by more than RPI. I have therefore written to advise them that if they implement the proposed increase I am exercising my right to end the contract early without having to pay the charges for the balance of the Minimum Period. I shall be interested to see how they respond.

Pass the word around to anyone you know who subscribed to O2 after 18 December 2012, when the RPI for November 2012 was published.

Mission Impossible? says:
14 January 2013

That’s interesting. Did you subscribe directly with O2 or did you use a third party, Tesco Phone Shop maybe?

When you signed, were you made aware of the price increase? Did the store have notices clearly displayed advising of O2’s price increase? To the best of my knowledge, all stores, third party included, should be making customers aware of the price increase.

If you did this directly with O2, they definitely should have made you aware. Did you do it online or via a retail store?

It’s quite a fight but if you have a valid case, O2 will back down. If you took this out via Tesco, instore, check your contract, it may well have a pleasant surprise, if not, probably still worth fighting, good luck

Anonymous says:
21 January 2013

I’ve also had exactly the same experience. I purchased my phone through phones 4 u and was not told of the price change (or that they could change the price). Does anyone know if you terminate the agreement whether you can keep the phone?

Mission Impossible? says:
22 January 2013

As far as I know, the only time you ever have to return your phone is if you end the agreement under a “cooling-off” which as far as I can see, is only when you sign directly via the networks, either instore or online.

Nowadays, most if not all 3rd party stores such as Tesco Phone Shop, Phones4U etc no longer offer cooling off periods. If you’ve acquired your phone via a third party and you later choose to end your agreement early, that 3rd party is no longer involved.

As most will be aware now, due to the rather favourable contract I originally signed in Tesco, I used the terms within to force O2 to allow me to leave without penalty and succeeded.

As there is nothing in either either O2’s or Tesco’s T&C’s with regards to returning the phone then I guess the advice that I’ve been given is correct. I already know that O2 will not be making a claim on my phone and as it is not in the terms at this point, they’d have another fight.

As for Tesco, I’ve yet to here anything and without anything in their T’s & C’s it would be interesting to watch them try.

Remember, when you cancel within a cooling-off period, any monies paid with regards to a line rental and towards the phone are returned. Only thing you may have to settle is out of bundle charges. In this situation, since the contract is being undone as if it never happened, then yes, you’d have to return you phone and that would be made clear in the contract.

If you are ending (not cancelling) the contract post cooling-off (if offered), you’ll still be paying your monthly fee’s etc upto the point the agreement is terminated. with nothing in T’s & C’s then this is simply about ending the agreement from the point you gave notice.

I’ve spoken to a few 3rd parties outside O2 and Tesco and all explained that neither party has any claim. I can’t tell you if this is legally correct but with nothing in any contracts post cooling-off I guess it is probably true

Eleonora Distefano says:
15 January 2013

Hi,

I discovered today that the company is changing my Fix term contract price only because I went to check something on their website, they did not advise me at all.

Also the Ombudsman said that the only case they can take is about the fact that they did not advise me about the change in contract. That is disgusting, and now I got another 12 months left with o2.

Anything I can do? I should have the right to cances without a penalty if they increase the price

Looking out says:
21 January 2013

Sam/anyone else with the Tesco Phone Shop contract,

Has anyone taken this any further or had any luck? I fail to see how O2 can reasonably not stick by their own contract that we both agreed to – if the shoe was on the other foot you would certainly know about it.

Mission Impossible? says:
21 January 2013

If you’re not already aware, yes, I finally got O2 to accept the terms of the contract I signed but not without a lot of confused advisers who refused to accept the contract I originally signed in Tesco.

Eventually, on solitary manager accepted that for some unknown reason, I had in fact signed a rather different contract from the one that has this nasty RPI clause (along with others). Since I’d never been made aware of any other contract period, let alone with 30 days notice as required when changes are to your disadvantage, focusing on the contract I’d signed, O2 conceded that the terms were legally binding and I’d been applying them correctly all along.

With this in mind, assuming this was still what I wanted, O2 was now going to close my account as I’d originally requested. I was offered to swap to a monthly, rolling contract of my choice but for now, on principle, I simply wanted to close the account as agree’d with no termination fee.

As a result of the time involved, some funds will be credited back along with a goodwill gesture of £50 from earlier for the price increase and the expensive 120 mile round trip to Slough head office (who originally actioned the goodwill gesture.

This is quite sad for O2 because had they simply held their hands up and offered something like this in the first instance, I’d have stayed in contract.

Ultimately, O2’s real problem is customer service related. Given that I was only a few months into the contract, at nearly £800 profit loss to O2, this has been a costly mistake.

Nothing against O2, in fact, in a matter of speaking, I’ve gone back, albeit, via their cheapest GiffGaff deal, at least for now.

Basically, know your contract. Don’t be fooled into accepting any old contract. Read the one you originally signed. And when it comes to confronting the networks, if you’re confident in your case, stand your ground and don’t let them deceive you. Good luck 🙂

Looking out says:
21 January 2013

Is there any value at all in going to an O2 shop (going to head office is unfeasible for me) or would that just be a pointless exercise? They have usually been very helpful before when dealing with my parents but obviously this is a much different scenario.

Anonymous says:
21 January 2013

I signed up a s a new customer to O2 on Saturday 19th January. Today, Monday 21st Janaury, I’ve been advised that my contract will be changing on 28th January. I think it is outrageous that they advertise and sell a tarrif that they know is going to change. I agree with the fixed means fixed approach, but whilst that isn’t the case they should at least be forced to advise new customers of the change in tariff before they sign up.

Marco says:
23 January 2013

I raised a complaint regarding this price rise, claiming that clause 5.3 in the T&Cs is ambiguous. It states O2 can increase their line rental in line with the RPI inflation rate at the time they inform you of such a rise. However, the price rise was announced in December and the known RPI inflation rate was 3.2% (October rate). When the rate for December was announced on 15 January 2013, this was 3.1%. As clause 5.3 doesn’t state whether it’s the announced rate, I assumed it was the rate for December. Obviously, the rate for December was less than the proposed price rise. As such, I claimed to have the right to terminate once the December rate was announced. Any opinions/advise on this would be welcomed…

sneaky says:
26 January 2013

Just signed 3rd party contract through carphone warehouse before xmas then stumbled upon the price increase whilst surfing 02s forum. Maybe which should also investigate 02s forum, As I was met with hostility from others posting responses to mine. Some of which stated they worked for 02, but with a disclaimer that they were their own views/opinions and not those of 02/telefonica. It seems strange that an employee would surf the forum of an employer outwith working hours. I mean seriously, Who would log online in their own time to defend unfavourable comments on a forum about the company they work for???

Mission Impossible ? says:
27 January 2013

Hi Frank, I’m sorry you are having the same problem as me. I had exactly the same problems getting O2 to accept the contract I originally signed but eventually the did. Not as a goodwill gesture but because this was exactly what the contract said and just like I’m bound by that contract, so are they. There was nothing open to interpretation, this is what is so nice about this ‘wrong’ contract.

While mine has been finally resolved accordingly, to the best of my knowledge, O2 is claiming that mine is a unique case, even though they’ve been advised that others have the same contract.

I’m more than happy to share all my letters to O2 with you so you can see how I presented my case. It is not fair that O2 has accepted my contract while denying others the same. releasing me from my contract wasn’t a goodwill gesture (I’d already got one of those) it was because they had no choice. This is an error between O2 and Tesco to resolve but for now they are just as bound by this contract as you.

Personally, I don’t think it is fair that some are getting one contract with all this RPI stuff while others are getting this so-called ‘wrong’ contract. Maybe people on other contracts can insist O2 let them out too? Now that would be a result 😉

Give me a call, I’d love to help you and others get the same resolution. Don’t give in and don’t give up 🙂

[Sorry Mission Impossible, we don’t allow contact details on Which? Convo. Thanks, mods.]

Mission Impossible ? says:
26 January 2013

While many of you may well have signed O2’s current contract with its RPI wording, there will be many more who’ve signed with O2 via a Tesco Phone Shop. Due to an issue between O2 and Tesco, the chances are, you have a very different contract with a very tasty exit clause that will allow you to leave without penalty.

Yes, you did read that correctly, you can leave, penalty free !!! 🙂

How do I know this? I signed such a contract and O2 was forced to accept the contract I signed and allow me to leave as per the contract I originally signed. It was a fight but at no point did I have to resort to court proceedings (though I would have).

To the best of my knowledge, while O2 and Tesco fight over the legalities of this (wrong?) contract, they continue to give out that same agreement for contracts signed in-store.

What I can tell you is that this little loophole is unique in that you’ll only get that contract if you actually visit a Tesco Phone Shop. If you sign online, when it comes to the T’s and C’s, it is simply a link to O2’s current terms with all this nasty RPI wording.

I discovered this by accident when I questioned the price increase back in mid December as I was told that my price was fixed and couldn’t be changed, even with future price rises. It was only when O2 told me that I should have read my contract that I did just that. This is when I discovered my contract was different. While O2 can change the contract or the price, in O2’s words, if it is to “Your Disadvantage” under this situation, you may leave without being held to the cost of the minimum period.

Seems to go to be true? Well this is the exception, it REALLY is true.

If you’ve signed via a Tesco Phone Shop as found in the big Tesco Extra stores, go find that contract, it is gold dust, literally. If you’ve lost it, go back to the store and ask for a copy of the original contract you’ve signed. Do not let Tesco or O2 point you to the current contract on O2’s website. This is what O2 tried with me.

For those that will say that O2 can change the terms, yes, you are correct but again, if those changes are to “Your “Disadvantage”, they must give 30 days notice of such changes. In my case at least, I was never given any notice, in fact, because O2 was previously unaware that Tesco were giving this ‘old’ contract to customers, they never sent any notice period.

As this was a breach of the contract I originally signed and it wasn’t resolved within 7 days, that also gave me grounds to leave without penalty.

So what now?
Easy, go pull out your original contract, the one you put pen to paper with. Even better, ask the store to email a copy of contract, they should be able to email both a scanned copy of the entire agreement along with a much easier to read, completed PDF’s.

Below is the paragraphs of interest:

8.3 If this Agreement is ended during the Minimum Period, you must pay the monthly subscription charges up to the end of the Minimum Period. This does not apply if you end the Agreement for the reasons in paragraph 8.4.

8.4 You may end this Agreement at any time by giving us notice if:
(a) we break this Agreement in any way and we do not correct the situation within 7 days of your request;
(b) we go into liquidation or a Receiver is appointed over our assets; or
(c) we increase any of the Charges for the elements of the Service you are using or change this Agreement to your disadvantage. In this situation paragraph 8.3 will not apply.

11. Changes to the Agreement
We may change this Agreement and the Charges at any time. If we increase the Charges for the elements of the Service you are using or change this Agreement to your disadvantage we will give you 30 days’ notice before the changes take place.

For reference only and to help you confirm if you have this ‘nice’ contract, below you will find paragraph 5.3 of the contract that was previously given out via Tesco Phone Shops:

5.3 You must pay your monthly bill by the date stated on the bill. For any overdue payments we may charge interest at 2% above the base lending rate of HSBC Bank Plc. Interest is charged on a per annum basis, calculated daily. We reserve the right to make a charge for our reasonable administration costs which we incur in the case of late payment or non-payment of Charges.

If you have the above wording, then chances are, you have the ‘nice’ contract. Below is 5.3 of the ‘nasty’ one:

5.3 You can end this Agreement without having to pay the Monthly Subscription Charges up to the end of any Minimum Period you have left, if:
(a) we increase your Monthly Subscription Charges by more than the Retail Price Index (RPI) annual inflation rate at the date we notify you of the applicable price increase; or
(b) we increase any of our Charges (apart from for Additional Services) in such a way that would have increased your total bill for the immediately previous month by more than 10% (if the increase(s) had applied for the whole of that month).

Now go find your original contract and help show O2 that I didn’t just win the O2 lottery 😉

Frank says:
26 January 2013

Well done Mission Impossible.
I too have the Tesco T&Cs and following hours of useless ‘chat’ with O2 staff who only believe in a different set of T&Cs I emailed them and attached a scan of the terms. Their reply: ‘We don’t open attachment files due to security reasons’ but they gave me a fax number and the name of an O2 person to FAO the fax to. Things were looking up – for a short while! THEN first of all their machine would not answer and then I faxed twice a short time later and got an OK transmission reports on both occasions from my fax machine. I then emailed O2 (as per their instructions) to say I’d faxed it and they replied that they had not recieved my faxes. I faxed again yesterday from a different fax machine and am now waiting for their reply…..

Mission Impossible? says:
5 February 2013

Hi Frank,

I’m sorry you too are fighting with O2. I think the email thing is just an excuse and I’ll tell you why. I did as they asked, took my contract into an O2 store who eventually, under duress, faxed the details to the number I’d been given. Later O2 claimed they didn’t get it but funny thing is, suddenly, they found it a few days later. All of this was academic because the person dealing with it did anything but.

Now here is the funny bit. Despite originally telling me they could accept email, many others did . Eventually one manager did and bless her, she confirmed I was right all along and terminated the agreement without quibble.

All this stuff about won’t accept email? imao just an excuse to avoid having to read and accept our contracts. Not sure if I’m allowed to print this but her name is Jo-Anne Mathews. If you can get hold of her, I think this might speed things up a little or better, get you the results you’re after, good luck

Confused says:
26 January 2013

I need some advice.
When I began my contract, I was given a summary to read and sign. It says that it does not form part of the legal document.
I have emailed O2, but all they are able to say is a repetition of the terms and conditions. I let them know well in advance that I disagree with the price increase, but again I receive a repetition of the terms.
I also informed them that I received my email about the price increase late, and therefore a different rate of inflation would apply to me. But they said the 3.2% applied because it was the RPI when they started the PROCESS of notifying people, not “the date we notify you” as stated in section 5.3(a) of the terms (which I only managed to read because of this whole issue. Had they not decided on an increase, I would have been none the wiser).
I am stuck as to what to do next, because I firstly didn’t sign the actual legal document. And secondly, O2 have played around with wording to suit them, when they notified me late.
What do I do now?
Thanks in advance.

Sam Wardill says:
31 January 2013

My local trading standards have taken an interest in this case. They advised that RPI increases were a ‘valid reason’ to allow price increase terms under OFT guidance on Unfair Terms in Consumer Contracts Regulations. The enforcement officer did say, however, that, although RPI increases meet the OFT guidance ‘valid reason’ definition ‘it is not immediately clear why a contract for less than 12 months would need to include a term allowing the price to be raised in line with inflation, when the RPI was already known.’ My contract is <12 months.

The enforcement officer said that Slough trading standards are investigating this and he will let me have their response in due course. I don't hold out much hope that Slough TS will pursue this though as O2 are unlikely to capitulate and trading standards (with limited budgets) would probably choose to pursue cases in court where they have a high certainty of winning, fighting companies with shallower pockets than O2 (especially given the fact that Ofcom is already taking this case up).

O2 new subscriber says:
14 February 2013

I’m interested in O2’s response to Confused as that is the situation I am in. My 24-month contract is direct with O2, i.e. it contains the RPI clause. Having written my post, I realised that I shouldn’t point out to them immediately that their proposed increase was greater than the RPI permitted by clause 5.3 as this would enable them to give me a revised notice of an increase of 3.0% to take effect from 28th February. Instead I waited until they couldn’t give me the required 28 days’ notice of an increase from 28th February before telling them. So now I am waiting for their response. I suspect that it will be the same as Confused’s.

My advice to Confused is to point out that clause 5.3 is quite clear that the RPI which is to apply is that at the date of notification, which for Confused is 3.1%. The fact that the RPI was 3.2% at some other date is irrelevant. It’s O2’s bad luck that the RPI has fallen (or perhaps it isn’t: I wouldn’t be surprised if they chose to implement the increase when they did because their economic models showed that that was the optimum month to do so). I’m just sitting tight now to wait for O2’s response and to see whether they take the payment out of my account with the 3.2% increase.

O2 new subscriber says:
14 February 2013

Sorry; the last post got trashed in submission because I used angle brackets. Note to the website: a preview button would help. Here it is again using UPPER CASE for items which you need to complete:

On DATE1 you sent me an email which says that you are proposing to increase the monthly charge by 3.2% from 28 February 2013. I was surprised to read this as I signed up for a price of £15.50 a month but it appears that you actually intend to charge £16.00 a month. As the email was labelled “welcome to O2” it appears to me that you intentionally withheld the information about the price rise while I was choosing my phone.

Your notification to me is dated DATE2. The ONS publishes the RPI inflation rate for a month around the middle of the next month. The rate for November 2012 was published on 18 December 2012 and was 3.2%; that for December 2012 was published on 15 January 2012 and was 3.1%. The one which is relevant to the notification to me is therefore that for MONTH 2012, which was RATE. The rate which you quoted, 3.2%, was that for October 2012.

Under paragraph 5.3 of the Agreement between us, I hereby give notice that if you proceed with the proposed increase in my tariff on 28 February 2013, I exercise my right to end the Agreement early and without having to pay the Monthly Subscription Charges up to the end of any Minimum Period because you will have increased my tariff by more than the Retail Price Index (RPI) annual inflation rate at the date on which you notified me of the applicable price increase.

Frank says:
20 February 2013

Patrick, have you had the opportunity to speak with O2 regarding their Tesco Ts&Cs and have you had any response from them?
Thanks
Frank

Just two months into a two year contract, O2 told me that my contract would go up in price. When I took out the contract on the phone, I was told it was a fixed price and there was no mention of any possibility of a price increase. I am angry about the increase because I believe this is sharp practice.