/ 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
Gee shirlaw says:
21 January 2013

After waiting nearly a year for my contract to complete I informed Orange that following the price rise in January 2012 on my fixed price contract and after 10 years with Orange I was moving to another provider .It felt good.

brat673 says:
24 January 2013

Surely the unfair conditions of contrcts should apply? Doesn’t this apply to energy contracts?

yoda shite says:
24 January 2013

VODAFONE -just rang customer services free on151 complaining about 70p increase pm. Quoted some legal jargon and said I would take it further. Was offered £8 credit. Not the full whack I know but better than nowt.

Ken Adams says:
25 January 2013

I do not understand how service providers, in law, can change prices mid contract. If the price was part of the contract to start with, then surely, under UK law, the service provider has broken the contract.
After all the Oxford dictionary definition of a contract is “a written or spoken agreement intended to be enforcable by law”.
If this is correct why can a customer not take such a service provider through the courts if necessary to provide a test case which can then be used by other claimants?

@ken, It’s in the small print, that so many people don’t read, and almost all shop assistants never mention. It’s allowed because Ofcom permit them to do it because it in the small print.

It’s totally wrong I my view, but that counts for naught.

I agree that people should be allowed to leave their contracts if the price changes, without paying a penalty. But actually there is a 5th option which has not been put forward. I would like to see a fixed term contract with a fixed price that the providers cannot change.

Why are they issuing a contract for a fixed term in the first place? They do so to ensure they will make a certain amount of money each year and guarantee a certain volume of customers per year. It’s about security for the providers. And I don’t think that should come free to them as it does now. It’s extremely inconvenient for many customers to be stuck with a 2 year fixed contract. They gain nothing from this at all. The gain is entirely made by the providers.

Why not create a benefit for customers for shackling themselves with a single provider for a year or two? In return for their subscribers loyalty and continued custom, the providers would agree to fix the price of the services they provide. This would likely then ‘encourage’ providers to offer shorter term contracts or contracts with more flexible terms and conditions, which would be more suitable for many users, and would encourage greater competition amongst providers. At present they are having their cakes and eating it too. There is no certainty or security for customers, why should there be for businesses either?

Ken Adams says:
26 January 2013

Further to my earlier comment:- If a service provider offers a contract which includes a fixed price, then the service provider has broken the contract if the price increases – the contract has then ceased to exist. Surely then, the customer has no further obligation to the service provider. If this is not the case then there never was a contract in the first place. Service providers cannot have it both ways!

Ray Blackwell says:
30 January 2013

I am currently in an argument with Cheating O2 with regards to the price increase, I explicitly asked the rep if the price could increase and received a firm no sir it won’t rise. O2 in my opinion have mis sold the contract to me. Also they claim that their rise does not cause material detriment, but why should they decide that. How do they know their customers finances and how any rise effects them. If need be I will take the fight to the Ombudsman, I may not win but will cause as many probs for O2 as possible for cheating and lieing to their customers. I will win in the end though, O2 are going to 100% lose my business, I won’t deal with liars and cheats

Mission Impossible ? says:
30 January 2013

This is exactly the same problem I had with O2/Tesco. Before I even took out the O2 contract via Tesco Phone Shop, I talked twice with O2 in store and once on the phone and on all thre occasions, I was assured that fixed really was fixed with O2, even after I asked about future price rises. When I finally took out the O2 contract via Tesco, they said exactly the same yet just three weeks on, I received that lovely email from O2 to advise that the price was going up.

With regards to ‘Material Detriment’ you’re absolutely right, they can’t make that call, only you can. Regardless of what O2 (or anyone else) might claim, if you can find your ‘material detriment’ then you have a valid case with regards to leaving without penalty.

As many will know, I was lucky in that Tesco/O2 messed up and I (along with many others) were given a much older contract that made no mention of RPI etc and after a lot of moaning and groaning, O2 was forced to allow me to leave without penalty which I duly accepted.

Yep, you heard that correctly, I forced O2 to end my contract without penalty.

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.

8.3 is the clause that allows O2 to hold you to the value of the remaining contract term.
I actually had O2 over a barrel with both 8.4(a) and 8.4(c).

Since O2 had failed to give 30 day notice of a change in my contract to my disadvantage and in addition, failed to resolve that issue within 7 days;

“8.4(a) we break this Agreement in any way and we do not correct the situation within 7 days of your request”

In addition to holding them to 8.4(c) due to the ‘disadvantage’ of both the price increase but more importantly, the nasty changes to the contract, I also had them bang to rights over their failure to notify me of the changes to my contract.

They could have so easily mitigated this with an apology for the missold contract and a credit for the balance, just £25. Instead, they tried to get clever and argue a non-argument and with no other reasonable offer, when the finally conceded I was right about my ‘original’ contract and were going to honor the contract, naturally, I bit their hand off lol.

If anyone wants to see the letters I used to pull off this little stunt that cost O2 nearly £800 on my contract alone, feel free to ask. I’ll more than happily share all the letters/emails to O2.
It’s only fair that others who are lucky enough to have this contract should be allowed the same.

Hint

Do not be put off when O2 tries to cite their current contract as can be seen on their website. Pull up the original contract that Tesco asked you to read and sign instore. Unless O2 has given you 30 days notice of a change to your contract and that time has now passed, your original contract is the ONLY contract of interest.

You should also be able to ask Tesco for a copy of that original airtime application along with Tesco’s and O2’s T’s & C’s

I don’t have any specific legal knowledge. Quite simply, this is a very nice contract with very clear wording with nothing left to interpretation. Just takes persistence and will power on your part. Don’t let O2 fob you off with their sob stories about inflation.

If I can do this, anyone can 🙂

Addendum:

As of 27th January 2013 (maybe earlier) Tesco is now using O2’s most current agreement with all that nasty wording like RPI and ‘Significant Disadvantage (in O2’s reasonable opinion)’
Funny that 😉

Adrian says:
15 February 2013

T-Mobile increased my monthly payment. I complained but only managed to talk to a call centre operator who, of course, is not in a position to change change company policy or pricing.

Personally, I believe that the phone company should not be allowed to change the price. Period.

Allowing the customer to exit the contract after a price increase is a step forwards but it still leaves the customer with the hassle of finding a new contract which will probably be the same price as the increased price.

Unless the company is in administration or insolvent, why should they be allowed to change the terms of the contract at all?

Dickspots says:
16 February 2013

I am stuck in a 2 year contract with Vodafone.
Coverage at my home and at my workplace is terrible but Vodafone would not let me escape from the contract.
I sold the phone and threw the sim card in the bin and went over to O2 Payg.
Vodafone still continue to increase my rental charges (and even charge me for calls occasionally) when I have not had either the phone or sim (destroyed) for the past 18 months.
Roll on April when I can escape and be done with these pirates.

Ian Devine says:
20 February 2013

not sure how they even try to get away with what i have just come against!
“your contract expired 6th feb sir, so we charge you another month as a notice period” this confuses me, because if i work on a 30 day contract i only get paid for the 30 days, i dont get another 30 is this legal i am refusing to pay will i land up languishing in a cell for the rest of my life?!

Mission Impossible? says:
20 February 2013

I think you’ll find this is standard terms, they’ve been in every mobile contract I’ve ever seen.
It depends on how you look at it.

Once your minimum 24 month jail sentence is over, if you want out, you just need to give 30 days notice. This is the same for landlines, Sky TV, broadband packages and more.

It could be worse. How about if on expiry, you are automatically signed for another 24 months unless you give your 30 days notice just before the contract expires?

Interestingly, this is a nasty trick a well known home-phone/broadband provider often tries with unwitting subscribers. On or just after expiry, they phone you out of the blue and try to coax you into a fresh 12 month contract. No offers, just make it sound like you have to do this if you want to continue with their service while doing their best to hide the fact you lose nothing, just simply go onto a monthly rolling agreement, not nice and really wish I could name and shame !!

Adrian says:
20 February 2013

Just because it’s standard doesn’t make it right. It’s time it ceased to be standard.

Just because it could be worse doesn’t mean it shouldn’t be better.

Johannes says:
20 February 2013

Today I went to Vodafone who is my current Mobile provider and told them that when my fixed term contract is up on the 20 May 2013, I would be moving to a different provider. I have been with Vodafone for years now and have always had great service. However I disagree strongly that Vodafone can increase their prices while at the same time tying me to a contract that I cannot get out of. I wish more people will follow my lead and do the same as I and leave their current operator when the contract is up. It is also time that OFCOM acts to stop this and allow an exit clause for people who are on so called fixed contracts.

pmunc6 says:
20 February 2013

I recently wrote that my monthly charge had been increased after only 1 month into a new 24 month contract with O2. I wrote to O2 and told them that I was not happy and wanted to cancel my contract. They cancelled my contract and a few days later I received a huge bill in the amount of £764. I am stunned that they can get away with this sort of behaviour. They did not cause any fuss when I requested a cancellation but now they bill me for the remaining 23 months of the contract which, having cancelled, I cannot use. Are they for real ? Do they really think they can get away with this behaviour? It is time for Ofcom to make a decision on this matter, there has been enough outcry from people like me who are fed up with the way these companies seem to think this is morally correct.

lin lobb says:
12 March 2013

Go to the Small Claims Court.

hilary says:
2 March 2013

Just received this morning a letter from Orange with a price increase due to inflation, this contract is for my sons phone and it was bought on a budget and chosen because of the price and I was advised by the salesman that the price would remain the same for the duration of the contract, no point in having a contract really and now I am stuck with it with at a price that I would’t have entertained in the first place with no way out. Seems a bit unfair really.

Anne says:
13 March 2013

When I complained at an orange shop about the price rise, I asked why they did not make it clear to customers. As I suspected they have a script from Headoffice they have to follow. Its the same for the poor souls at the call centre. Basically, Headoffice are telling them to deliberately mislead customers.

It would be great if an orange salesperson broke rank and blew the whistle on what headoffice told them to say to customers.

Carrie says:
4 March 2013

Orange just wrote to me today to say my contract price was going up (again- this is my 2nd rise in this 2 year contract!!!). Providers are taking advantage and misleading consumers. Every time its time to renew my contract, and I phone to enquire about current plans, not one advisor ever says, well we can offer you a price FROM £xx, it is always £xx per month, with NO implication of any future price changes.

Also, what about people on incomes that do not allow for these ‘small’ rises? If a few pound isn’t a big deal for you, then great for you, but for some of us that adds up to a lot over the terms of a contract, especially when you get hit TWICE in one contract!

Ofcoms response suggests to me that they think it is fair that providers and consumers should share the risk of inflation. Well, as far as I can see, having had contracts for 10 years now, this practice has only come in to force when 2year+ contracts became almost the only option to sign up to. If providers therefore can not accurately ‘predict’ and therefore account for infation over this length of time, then they shouldn’t be misleading consumers with ‘fixed price’ deals and return to 12 month contracts.

This practice should be banned, its fixed or variable, it cannot be both. If its variable, explicit terms must be SIGNED by both parties.

Derp says:
4 March 2013

Three will be next I bet after just buying a load of 4G spectrum rubbish. All this RPI price rise is a cover up for the operators to offset the expense of buying 4G spectrum.

Never buy into a lengthy contract ever again, go for payg or a one month rolling and tell em where to stick it if it goes up in price. Ofcom need to sort something out now! It’s disgraceful that these companies can get away with it.

R Bain says:
5 March 2013

I would like Ofcom to investigate whether these price increases relate to increased market concentration in the mobile industry following the merger of T-Mobile and Orange. Fixed telcom pricing was always based on RPI-X% where X in most years resulted in an absolute fall in call prices. There seems to be real market abuse going on here.

ervin breuer says:
6 March 2013

It is not enough to let us out of a penalty. There’s a contract they must respect and no increase should be allowed. Why should I need to look around for another contract even without a penalty. Could I tell Tmobile that I want to go down in price in the middle of a contract? This is a sign of times.

What would happen to your “Free Phone” part of the contract if you have the option of cancelling due to price rise.

pmunc6 says:
6 March 2013

In response to your query as to what happens to the ‘Free Phone’.

I cancelled my contract with O2 having received a text to advise me that my monthly charge was being increased after only 1 month into a 24 month contract. I offered to return the phone but was advised not to do that by the person at O2. I was permitted, without any question or enticement to stay, to cancel my contract and they disconnected my line on a specified date. Several days later, I received a bill for £764.40! Are they mad! I have no means to avail of their services for which they have charged me and they want me to pay for it. Not going to happen. I paid the charges up to the cancellation date and have advised them that I will make a decision as to how to deal with the exorbitant bill as soon as Ofcom makes it’s decision on this. I am totally disgusted with how they have treated me and others who have expressed their opinions here.

Durr says:
6 March 2013

The phone itself doesn’t come into it. You own the phone when you sign the contract (and pay any fee for the handset). The cancellation charge will be months left x monthly bill. So 764.40 fee would equate to 23 or 24 months of a contract at around £34ish probably. Those terms will be in the contract.

Let’s hope ofcom come to their senses soon…