/ Technology

Hit by a mobile price hike? Want to exit without penalty?

Cartoon of happy phone

After more than 2,000 comments and 38,000 pledges on our Fixed Means Fixed campaign, Ofcom’s launched a consultation on how to tackle price hikes on fixed contracts. We still need your support to get the right result.

If you’re a Which? Convo regular, I’m sure you’re aware of all the mobile phone price rises we’ve had to suffer over the past couple of years.

O2 was the last to jump on the price rise bandwagon, with Vodafone, Orange, T-Mobile and Three Mobile hiking their prices beforehand. It’s a practice that will see their customers collectively paying almost £150m extra per year.

Following our Fixed Means Fixed campaign, Ofcom has now launched a consultation on how to protect you and me from such mid-contract price rises. And mobile phone contracts aren’t the only deals on the table; broadband and landline deals are also included in the consultation.

What does Ofcom’s consultation propose?

Ofcom concludes that its current rules are not operating effectively as they don’t meet our expectations that the price of a contract should be fixed. Instead, these rules are leaving consumers exposed to surprise price rises, without offering the ability to avoid them.

Ofcom’s preferred solution is to let customers leave their contracts without penalty if prices go up. At the moment, you’re locked into your mobile deal if prices rise. But how are you locked in? Because exiting requires you to pay a hefty fee – usually the remaining payments on your contract. And that’s no small change – if you’re not too far into a two-year deal, the remainder of your contract will run well into the hundreds of pounds. How exactly can you vote with your feet if you’re forced to pay a hefty fee to move to another provider?

Ultimately, fixed contracts should be at a fixed price. But if providers don’t want to stick to that, you should be able to say ‘sayonara’ and leave without penalty. That would put the power back in your hands – you’ll have the freedom to switch and take advantage of the best deals.

Help us achieve the right solution

However, Ofcom has also put forward other potential solutions. These include issuing further guidance for mobile providers, ‘opt-ins’ for variable price contracts or even maintaining the status quo – an option I’m sure the providers would welcome with open arms.

At Which? we want to see Ofcom act upon its consultation without delay and make the right decision. Not only should you be able to cancel without charge if prices go up, Ofcom must ensure providers tell you about this right before you sign on the dotted line. No more surprises.

So, that’s what we think about Ofcom’s consultation here at Which?, but we still need your help to achieve the right solution. Ofcom’s consultation lasts 10 weeks, so there’s plenty of time to tell the regulator what you think, either by responding on Ofcom’s website or by commenting below. We’ll feed your comments into the consultation to make sure no views go unheard.

Do you think you should be able to exit your contract without penalty if providers put your prices up mid-contract?

[UPDATE 7 March 2013] – There’s just one week to go before Ofcom closes its consultation into price rises during fixed contracts. Have your say by voting in our poll and watch our new Fixed Means Fixed video:

Comments
Dory says:
3 January 2013

I agree! I would prefer to leave a contract if a price rises when we aren’t really aware it’s going to happen.. It wasn’t explained & really, who actually reads the small print when you’re being rushed through the shop so the sales person can get to the next person?..

Angie says:
3 January 2013

I would prefer to have the option leave a contract with no penalties when there is a price rise if I can get a better deal elsewhere.

Darryl Godden says:
3 January 2013

Absolutely.

Companies are the first to quote terms and conditions when customers ‘break’ them, yet the very last to point out a pivotal clause, in their favour, squirrelled away in those T&C’s.

O2’s, for example, run to 13,000 words and 14 pages.

Mike says:
3 January 2013

I would also like provision to leave a contract early with no penalties when there is a price rise to allow me to shop around (of course more 12 month contracts would be good as well!!)

Ross says:
3 January 2013

Allowing early contract termination for price rises seems too complicated for the vendor. Contracts are priced up based on your 2 years custom. It would be better if contract prices were fixed by law, that way people can make a meaningful price comparison between phone companies. 2 years is not a particularly long contract, I dont see why phone companies cannot price future rises in to a 2 year contract.

Keith says:
9 January 2013

Oh the poor dears! If they didn’t want the hassle, then they wouldn’t implement the price rises, which would mean the price would fixed. Of course, they’d still do it, because the majority of customers can’t be bothered to do anything about it.

Call me old fashioned, but why not just ban the phone companies from using the word FIXED unless they generally are ( e.g. Zero price changes allowed, unless its a VAT change). They could achieve that faster than the time its taken me to spell chuck (spell check) this spot (post). (sorry for the deliberate spelling mistooks (mistakes)).

No clues for guessing whose avoided getting a mobile phone then 🙂

Ray Blackwell says:
3 January 2013

Yes the consumer should have the right to withdraw from a contract if there is a price increase. In my case i was told by O2 over the phone at the time of sale that my contract was £21 permonth fixed for 2 years, I am currently at war with O2 over this and have already spoken to ofcom and will, if needs be, go to the Ombudsman with a complaint of mis-selling. Fixed means exactly that, it’s set in stone and not to be changed.

I know this is being a bit OTT, but shouldn’t your poll question have the word FIXED in it somewhere, as without it, its a different question. 🙂

Steve Morgan says:
3 January 2013

How can a contract in which the supplier is at their discretion to increase the price be considered fair?

Have a look at the OFT’s guidelines on unfair contracts, here:

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311.pdf

Section 12, includes:

“Schedule 2, paragraph 1, states that terms may be unfair if they have the object or effect of:
(l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded.”

As such, I would suggest such a contract could be legally challenged under the Consumer Protection from Unfair Trading Regulations.

lin lobb says:
3 January 2013

If you take out a contract you should pay the same all the way through otherwise it is too easy to get people in at a low price then up it later when they have no way of leaving. Also the terms and conditions should only be a certain number of words on an A4 and printed in Times 14 size. NO MINUSCULE print size.
When I have read the Terms and Conditions of a contract they always seem to be endlessly repetitive, confusing and a lot better than a sleeping pill.

I think that once the first 1 year or 2 years contract is over there should be no restrictions in jumping ship. The mobile companies are just doing the same as BT who seem determined that everyone who is served by BT is on a ‘rolling contract’ These are dangerous to the customer!!

Marie says:
4 January 2013

If I agree a price for something I buy I don’t expect the seller to come back to me after a while and ask for more money. Fixed ACTUALLY DOES MEAN FIXED already. It is the allowing of companies to get away with their behaviour that is the problem. As a nation we allow this crooked behaviour. Those representing us in government don’t protect us from what are essentially illegal acts. It is not just with phones but in most areas of life in UK.

Sam Wardill says:
4 January 2013

I think that fixed term mobile phone contracts should be regulated like electricity & gas contracts have been for some time. If the price increases, consumers should be given an opportunity to cancel.

All Ofcom would be doing by enforcing this practice is clarifying interpretation of what is an existing law on Unfair Terms in Consumer Contracts. As such I think that this regulation must be retrospective. Ofcom seems to want to give operators a few months to comply. I think this is unworkable because it would still require consumers who have suffered to date to challenge their contracts through small claims court (as the Ombudsman seems unwilling to get involved).

Whilst I agree that there should be the option to cancel your contract without penalty, but an even better solution would be a contract where the price is agreed before hand and NO price hikes (as in “fixed means fixed). That way there would be no need to cancel at all. Why doesn’t Ofcom use that idea instead of saying “you can leave without incurring a penalty”. It seems to me with all the comments I’ve read that this is what most customers want anyway. “Which” should force the issue with Ofcom by saying customers want fixed contracts and the option to opt out! After all at the moment everything price wise is with the operators and not the users!!

f0rdy says:
4 January 2013

I would like my money back from 3G for the extra they have deceived out of me & the bill to revert to the fixed £25 a month I signed up to! & for my bill to stay at the fixed £25 until I change contract!!!

Steve Morgan says:
4 January 2013

Then pursue a legal case for a unfair contract through the Small Claims Court.

Just because Ofcom can’t currently deal with it through their regulations, there’s nothing to stop you pursuing it under contract law.

Steve Ellis says:
4 January 2013

The clue is in the word “Fixed” !!!

They have forced us to make 21 year contracts for their benefit of planning so they should stick to their plans and allow us to decline the contract further without penalty.

I’m an O2 customer and I am fed up with the service. After a shocking year of signal outages lasting over 24 hours a piece they still felt they had the right to hike prices up. I read my contract and it states they are within their rights to increase the fee by a certain %. Whether or not this has been abided by I am not sure, but the person on the other end of the phone was rude as hell when I phoned 202 to cancel. I even offered to give my £400 handset back – which is in mint condition. I’ve paid for the service up until now, they can have the phone back at near full value it was given to me – and they stop providing me the service. Why is that so difficult? Why can’t I exit?

Terry says:
4 January 2013

Copy email sent to Ofcom:

Why is it that Ofcom, as the telecoms regulator, are not on the side of the consumer! I have just been hit with a price hike on my phone contract despite the fact that I was told by the supplier when I bought my phone that the contract figures were fixed – which I know realise they are not – in effect I was lied too

Why doesn’t Ofcom clamp down on these underhand practices and stick up for the consumer for a change rather than being on the side of the providers as has been proven in the past by Ofcom’s inaction on this issue?

If? Ofcom does eventually do something about this contract fiasco problem (which I doubt) then it needs to be done forcibly and NOT via some futile voluntary agreement with the providers.

Its about time Ofcom got a grip as they are certainly “not fit for purpose”

Terry Reed
P.S. complaint letter also sent to my MP and Prime Minister

Crawford says:
4 January 2013

I was caught mid contract with a price hike from O2. I phoned and objected saying that if I had decided to change my contract terms would O2 have agreed. NO WAY!! I was then advised that if I wasn’t happy then I could terminate the contract however this would incur a penalty. This is grossly unfair. On the one hand big business can change the contract terms but I can’t.