/ 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
f0rdy says:
5 January 2013

How long will ofcom take? Are they waiting for everyone who has been effected to be out of contract?!!
If the result of all this campaigning is that they [providers] will modify the way they operate in the future then ‘the way I see it’ is that they [providers] have got away with ripping off consumers scott free! What a deterent!
Thanks ofcon…. for nothing.

K Brooks says:
5 January 2013

It seems to me that contracts should not include unfair terms.
If a contract does contain such fundamentally unfair and one sided terms, whereby the providor can just raise charges part way into a contract that has been entered into in good faith, that is unfair and should be considered to be a breach of trust and contract.

persiantom says:
6 January 2013

My Letter to 3

3 Customer Services Wednesday, 12 December 2012
Hutchison 3G UK Ltd
PO Box 333
Glasgow
G2 9AG

Dear Sir/Madam
I was amused to receive another call from your Indian call centre.

Although a pleasant lady to speak with, but with no ability to either answer my questions or the power to help resolve the dispute.

I will no longer wish to correspond or contact your you unattended Glasgow office (as per your Indian operator’s statement) very surprise that my letters get to India from an unstaffed office in such a short time?lol

I am terminating my contract, will expect to transfer my number to a more professionally run service provider and without any further payment, I expect to receive the appropriate code by email or text.

May I also remind you that 3 broke the terms of my contract when they increased the payment (in July) to which both parties were bond to and without the verbal or written agreement of myself.

As long as the legality of this increase is concerned, the jury is out on that (As per Ofcom’s saying).

Maybe it is the same as the PPI, that the banks have been forced to reimburse those effected, I wonder how many £1.25s you will end up returning to your effected customers? And will you still ask your Indian call centre to present your case as you asked them to sort out my dispute without giving then the appropriate power of decision making?

Yours sincerely

A Toosi
Copy to: My solicitor…Ofcom

Bill says:
6 January 2013

I have taken out a 2 year agreed price (budgeted for) contract with a mobile phone company. If they want to amend or change the terms of that agreement/contract then I should be in a position where I can either accept or decline the new agreement/contract, without incurring any unbudgeted for financial burden. Where they required to adhere to that agreement/contract (which again I have budgeted for) then I would be very happy.

Took a new O2 contract shortly after the iPhone 5 came out in Oct 2012. Less than 2 months later, they inform me that my contract is going up. I dont believe for one second that when those iphone 5 contracts were made available in Oct O2 didnt have a clear idea of what their costs were going to be. It’s a big con and rip-off. All this extra cash the various operators are raising in this new way is going to end up in the Exchequer coffers once O2 et al have paid for extortionate 4G licenses through an auction. 4G service i am looking forward not to be able to enjoy during the remainder of my 2 year contract.

All the providers are operating a “cartel” It should be made illegal because it stifles true competition. Greed is the order of the day with all service and utility providers. Because so few people take the trouble to make a robust complaint against such practices the providers just carry on regardless knowing that they can get away with it. If they all put their prices up what will anyone gain by taking their business elsewhere!!!!…………

I ALWAYS complain………… I have just complained to Virgin Media for increasing my broadband tariff mid-contract and have obtained a refund. I am in process of doing the same with 02.

Unless more people get involved and fight for the moral rights in this matter there will never be any changes made. I think everyone should also write to their MP and also to the Minister for telecommunications (not sure who he is but I intend to look him/her up!!). If sackloads of mail were to be delivered every week to the people whose job it is to bring pressure to bear for the common good, they might just be motivated to do something for a change!

Aubrey Escoffery says:
8 January 2013

What is good for the goose is good for the gander. That is the essence of the equitable aspects of a contract. All contracts should remain firm for the contract period and not subjected to the ‘whims’ of boardroom greed.

SusanL says:
9 January 2013

I just feel that when I enter into a contract for a specific period at a specific cost then I am legally obliged to pay as the contract states. I cannot change or get out of the commitment I have made so why should the provider be able to. Surely a contract is an agreement between 2 sides and both should be as legally committed to the terms as stated. Obviously I accept that if VAT rises or falls that would change my payment but other than that nothing should.

dhopley says:
9 January 2013

My supplier Supanet has tried more than once to raise my monthly fees during a contract period and cheekily they tried once again under the cover of ‘they’re all doing it’ , so you’ll have to pay , but without having included the weasel word clauses that the big boys had . I threatened ‘material detriment’ and they backed off and reimbursed me the overcharge . These ‘inflation only rises’ are the devil to police anyhow , who sets the rate applied and when does the year start etc. ? It’s only cover for sting attempts by greedy suppliers as genuinely applied ‘inflation rises’ won’t give them the big rip offs they’re seeking ,

Kevin says:
9 January 2013

Noboby points out that prices can rise in a ” fixed” contract and its not correct . Of course if they did comsumers would be very cautious. Just looked at the very small print of my Tesco Mobile/O2 contract – clause 11 – ” WE MAY CHANGE THIS AGREEMENT AND THE CHARGES AT ANY TIME . IF WE INCREASE THE CHARGES …………… WE WILL GIVE YOU 30 DAYS NOTICE BEFORE THE CHARGES TAKE PLACE ” so its a charter for these companies to do what they want. There has to be protection for the consumer also to cancel without penalty .

And the real funny thing, is that its Ofcom that allows them to have that clause. We need a regulator who sides with the consumer and not the industry.

hurrdurr says:
10 January 2013

I would like to see Ofcom apply this to all the price rises in the past year or two if they do pass it. Millions of us have been affect by unfair contract rises in this period so it’s only right we have a way out.

I am still riding out my Three contract even though they are the worst network I am stuck with them thanks to their disgusting attitude. I will never buy into a 12/24 month contract ever again, 1 month rolling is the way to go for smartphones.

Andy C says:
10 January 2013

Reading the many comments in this and other threads it strikes as bizarre that no consumer group has been formed, for the specific purpose of challenging all mobile phone operators on this.

In my case, as with everyone else, I was never told at the time of signing that there was a hidden clause allowing for an increase halfway through the contract. Some will say that I should have read terms and conditions before signing. But what got me to Carphone Warehouse in the first place, was O2’s fixed term, 24-month, £36 per month online offer. It was on that premise that I decided to get the contract, I reacted, quite evidently, to misleading advertising, and that’s illegal as far as I can tell.

At no point during my interaction with Carphone Warehouse was I informed of that hidden clause, and so I am quite certain that will be ruled illegal in a court of law. And it is not about the £1 something but a point of principle.

Once I got, like all the others, O2’s email informing about increase, I went to their site and tried to get the contact details of the person signing the email, Martin Bould, so that I could reply. An extremely rude member of staff asked if he was speaking in another language, when I challenged his reply that no details of Mr Bould were had.

I subsequently managed to trace Mr Bould’s email address, and sent him an email, that while unanswered to this day, was opened and read by him and other O2 staff. After that some customer services people started writing repeating the company line. I argued, repeatedly, that I would keep paying the agreed amount for the duration of the contract, but the moment my bill showed the promised increase I would cancel the direct debit for breach. A phone call by another O2 chap followed, asking whether what I have written in various emails was true, and shortly after the call I got an email from the same chap saying “Good to speak to you earlier. I hope I answered all your questions” when, as a matter of fact, I didn’t ask any questions to him.

In my opinion O2 is at a losing end here. Had it not used a promise of fixed terms to lure people into its contracts, it would be in the clear. Problem is it did, and I, and thousands of others, fell for its utterly misleading advertising, which is illegal.

One can only hope that OFCOM and O2 see the sense of avoiding many legal challenges that will surely ensue. It’s not the increase, not whether or not the clause is in the contract, but rather misleading people and knowingly keep silent about contractual clauses that would otherwise make people think twice before signing.

Paula says:
15 January 2013

I have advised O2 that I will pay the agreed monthly fee however, once I see the proposed increased amount on my bill, I will cancel my DD and they can do whatever they feel necessary to recoup the charges. I have no intention of taking them to court, I feel the onus is on them to justify why they feel it moral to sell me a package at a ‘fixed’ monthly cost and then, after one month, increase that charge. I appreciate, and have been advised by O2 staff when I mention it, that I will be ‘blacklisted’, my response to this is ‘knock yourself out’, I will not be held to ransom by such a greedy organisation. I am furious at their lack of response to my letters and emails.

Andy C says:
16 January 2013

Paula, I reckon the best strategy is to fix terms of DD with your bank, i.e. allow payments to be deducted only for the amount agreed in the contract. In my case it was £36, so that is the exact amount I will instruct my bank to pay O2 from 28 Feb onwards.

In that way, they will not be able to say that I refused to pay, and therefore any subsequent proceedings, on the back of thousands demanding that offered “fixed terms” ought to be respected, will have little chance to progress any further in court.

Mission Impossible? says:
16 January 2013

Hi Andy, interesting idea with regards to the DD but I’m afraid this won’t work.
The idea of direct Debit is that the operator, utility etc is responsible for making the request for payment from your bank. When you complete a Direct Debit mandate, you are advising your bank that you are giving O2 permission to request funds from your account.

What your are actually talking about is a ‘Standing Order’. Just like I Direct Debit, you can cancel a ‘Standing Order’ at any time but the difference is, you tell the bank to pay someone a specific amount on a regular basis. If the operator wants to change that amount, it will be you who instructs the bank to change that figure. With a Direct Debit, the operator makes the request for payment and as agreed in your contract, they can change that amount at any time.

There are two types of Direct Debit, ‘Fixed’ and ‘Variable’. ‘Fixed’ is most often used by the utilities or your home broadband while ‘Variable’ is mainly used by credit card companies, telecoms etc, where the balance is collected each month.

Basically, with DD, the operator makes the request for their chosen sum on a specific date, while ‘standing order’ is a request from you to pay someone else a fixed amount on a regular basis. With both, you can cancel the orders at your request.

While it’s very tempting, I’d advise against simply paying what you agreed originally, especially if they have those nasty clauses in you contract.

What you need to do is read your contract VERY carefully, see if there are any other ‘useful’ hidden clauses, just as I did. See if they haven’t made some mistakes that allow you to hold them to terms like the following;

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;
(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

Have they failed to notify you of a change in you contract to your ‘disadvantage’ with 30 days notice?
Have they failed to resolve an issue within 7 days that leaves the contract in breach?

This is how I beat the operator in question. They failed on quite a number of counts and I held them to the terms without ever having to involve a small claims court.

It is possible to beat the operator, you just have to stand your ground, a painful process but it does pay off 🙂

derp says:
16 January 2013

Unless you are on 3 who will argue the toss with you for an hour then make all kinds of claims as to how wonderful they are and have had no price rises in 6 years. I was on at them for 4 weeks every day and it made naff all difference.

Come on ofcom, set us free!

Fiona says:
10 January 2013

Surely this is akin to PPI misselling? It may say in the small print, but it is never discussed when you buy the product. Any chance of us getting back the additional cash?

Mission Impossible? says:
11 January 2013

Ok, Fixed should mean Fixed and if that’s not the case then how can you market as such?
That said, this is not an ideal world so the best balance is to allow operators to increase prices mid contract, provided the customer may leave without penalty if the price or the contractual changes are not to acceptable to them.

In addition, where contracts are promoted as fixed while allowing the operators to increase the price or change the ‘agreement’ mid contract, this must be clearly displayed in ALL stores and must be made clear to all customers at point of sale.

Not only is this a good balance but it could potentially promote healthy competition in that operators will have an incentive to drop such clauses altogether. With a bit of time and like, eventually, all operators would drop such clauses entirely and fixed really would mean fixed.

This is much better than imposing an outright ban and risk the wrath of the operators (ok, this is going to happen anyway;-)

for me, I have just achieved my own personal victory (I think) but mad though this may seem, after getting mine cancelled WITHOUT PENALTY, I will be going back (in a fashion) so they will still have me as a monthly customer so not a total loss for them.

Why? Simple, because they came good in the end and I hope this proves to be a positive learning experience for them.

Neil says:
12 January 2013

I agree that there should be the option to cancel your contract without penalty if there is a price rise.

But the best solution, and the most obvious to me, would be for OFCOM to insist that phone providers cannot increase the price of a ‘fixed price’ contract mid way through the contract. Fixed means Fixed.

Mission Impossible? says:
12 January 2013

I totally agree, Fixed, really should mean Fixed and I was livid when between Tesco and O2, I was misled into signing a “variable” (sorry operators but this is what they are!).

I would be very impressed if Ofcom grew a pair and stopped this misleading practice completely but I really don’t think it will happen but I’d love to be proved wrong.

What really needs sorting is this “Material Detriment” ruling. The need for the consumer to prove their ‘material detriment’ must be removed completely. It should not be open to interpretation or a threshold (currently undefined) of detriment. It should be exactly as it says.

As per the wording of my contract ‘Disadvantage’ should be interpreted as just that. An increase in price is clearly not to my ‘advantage’ and it certainly doesn’t leave things as they were so it follows that it is clearly to my ‘disadvantage’ and no court of law should be allowed to say it is ‘immaterial’ thus allowing the operators to lock us into a ‘variable’ contract that was deceptively sold as ‘FIXED’.

All Ofcom has to do is tighten up this ‘Material Detriment’ ruling so the customer may leave, no quibble, if they do not accept changes to the contract or the originally agreed price.

If an operator chooses to breach this ruling, you shouldn’t be forced to take the to court to end the contract, you should be able to give them that 30 days notice, bin the sim and cancel the Direct Debit with no threat from the operator.

For operators then still insist on using such terms, that’s fine but those terms made be made clear at the point of sale and it must be made clear that if you are not happy with those changes, you may still leave, ‘PENALTY FREE’, no quibble.

All this rubbish about proving your personal, ‘Material detriment’ should end. They should not be able to question or insist the ‘detriment’ must be ‘significant’. If your annual bill goes up by a penny or they new wording to you contract that is not in your favour, you should be allowed to end it at any time, with immediate effect, no quibble.

Networks, I say this unto thee, Don’t like the idea of everyone leaving mid contract on the basis of the above? Then treat your customers with respect, if they still want out, then let them leave, graciously, thank them for their custom to date. If you want to keep them, that’s easy, give them incentive to stay, offer them something extra, a free gift, gesture of goodwill, use your imagination.

Good customer service can go a long way, it’s easy to keep your customers, even if you feel you have to push through such price rises. Simply accept that some people won’t be happy so let them go. I’ll bet that most would much rather you mitigate that price increase for them in some form and that will be enough to keep them.

Had this been done with myself from the outset, even given the fact that my original complaint was due to the contract being missold on both by the operator and the store that sold the contract, I would have still stayed if the cost was mitigated and I’d got an apology. There is lessons to be learnt.

Instead of using price increases and nasty clauses, how working on gaining more custom instead of losing customers but charging the remaining ones more? This will just lead to even more leaving, whether in or out of contract.

The key is good, honest, customer service, job done 🙂

Susan says:
12 January 2013

Hi – I wonder if any one can give me any advice? Around May 2012 I took out a 2 year contract for an iPhone 4 with tesco mobile.

I have been very dissapointed with the service and the customer care. When I checked the coverage it looked fine. However I have had signalling problems on and off. I moved to Norfolk recently. At first signal was ok though a bit erratic. On one occasion this was acknowledged as 02 mast problem in Oct 2012. Since Thursday this week I have not been able to text or call. There has been no service. I have made enquiries and again twice today. I was told someone would get back to me. This has not happened.

I have wasted a lot of money on a device that I was expecting to be versatile and reliable. Does anybody know a way for me to be able to opt out of this contract and transfer to another network?

Am a university student and happen to be unwell at the moment so am feeling extra livid at the problems this is causing me.

Many thanks and commiserations to the rest of you who’ve been let down!

Paula says:
15 January 2013

I signed up for a 24 month fixed contract with O2 in November and in December I received a text advising me of the price increase, I had only made one payment! I have has numerous conversations with O2 reps who advise me that I do not have the right to cancel and, if I do cancel, I will have to pay the remaining 22 months without the use of the phone which I will have to return to them on cancellation. I am staggered that they can be permitted to act in this way. I have written several letters, the last to their complaints review department however, to date, have not had a response – positive or negative – from any department. I feel like I am caught between a rock and a hard place as, if I cancel, I pay, if I don’t cancel, I pay. Not happy!

Adele Waterfall-Brow says:
18 January 2013

I believe that if you sign up to a contract then you should just pay the price of what you have signed up for, what about if you are on a really tight budget and the slightest increase in one bill has a knock on effect on other vital living needs. it is not fair to do this to people, you should be told about this before signing up to a contract, i was really surprised when i got a text saying my bill would go up, i dint even know they could do this. its really not fair and may mean that people may go in the red because of this and they may occur bank charges or may have to borrow money to pay for these extra costs. its really not fair and i think the fact that you could leave the company if they do put their prices up is a great idea.

I recently took out a contract phone with 02 earlier this month (Jan). At the point of sale the sales adviser mentioned nothing of the upcoming prices rises on their contracts. It was only once I was home that I was looking on the 02 website that I noticed these upcoming price rises, and more annoyingly, that they had informed current contract customers about these prices on 17th December 2012, so the sales assistant should have known about this (he was a team leader or some other high up position). On phoning 02 customer services regarding this all they could say to me was that I was right in thinking that the sales adviser should have informed me about these upcoming price rises before I took the contract out.

Mission Impossible? says:
20 January 2013

Hi Joe,

You are correct, they should (and do) know about the price increase. As it is due to go up in February, I think at this point, they should all be making new customers aware of this, before allowing the customer to sign the agreement. Problem is, I’m not sure they actually have a legal responsibility to do this unless you actually ask.

If you have asked them to confirm the price will be fixed at the figure you agree’d to and asked for assurance, it will not go up, then you have been missold the contract and should have more than reasonable grounds to end the agreement without penalty (if this is what you want)

This happened to me, though in my case, while the store manager was fully aware companies were doing this, he didn’t make all his staff aware. This is still misselling, whether they did it knowingly or unknowingly. The manager on the other hand is far more culpable is he was fully aware.

In my case, I’d taken this out via Tesco and it seems like many, I was given a very old contract that didn’t have the terms on RPI (inflation). Depending where you took out the agreement, you might be lucky and have those same terms.

What you need to be aware of is that while you may well be able to leave, you CANNOT insist the network keeps to the price you signed to instore, all you can do, (at best) is request you to leave without penalty.

If you can do this on the basis of it being to your ‘Material Detriment’ (Offcom ruling) then regardless of anything your terms and conditions may say, they would have to allow you to leave without penalty.

In my original contract, the network had actually given me a very nice penalty free, escape clause and amongst others, this is what I used to end my contract early, in fact, VERY early as I’d only taken it out just before December 2012. With nothing else on offer, I held them to the contract and eventually forced them to end the agreement without penalty, some £800 loss on their part.

They will dig their heels in but keep fighting and it is more than possible to pull the rug from under them. If you have a case, say ‘Material Detriment’. favourable contract terms, misselling etc, it should be more than possible to do this. I never even had to take them to court, just stood my ground and it paid off eventually. Good luck if you choose to fight, I would 🙂

Addition to my earlier post.

I will be following up my earlier call to 02 regarding my contract price rise. I wont be voting with my feet this time cause the rise is less than £1, but I will be strongly pushing for some sort of compensation through miss-selling (or however you want to put iit). I will write back on this to let you all know how I get on, the outcome and how I went about it incase anyone wants to try the same thing

Straightforward says:
20 January 2013

If a contract has been signed for x mins etc for x pounds and it is sold as fixed – that is exactly what it should be. Only changes to comply with legislation . directives should happen. Also rounding up of bills is theft and should be treated as such.

It is up to the company to make their offering more interesting if they want people to switch.

There should be no exit fees from any contract, we are not talking about a massive investment for each individual customer to provide a service. A notice period to leave a contract where there have been no changes made the providing organisation should be similar to many standard employment contracts – one month.

Changes to variable contracts should have a notice period from the providing organisation of min of three months with the consumer having no penalties for leaving.