3rd Oct 2018
Ofcom research has found that up to 1.5 million customers are overpaying for their mobile phones.
The communications regulator highlighted that around two thirds of mobile customers on monthly bills are signed up to contracts that ‘bundle’ the cost of the handset and the cost of airtime.
Although this represents good value for many, Ofcom says that a “significant minority”, believed to be around 1.5 million, pay the same monthly price after the end of the minimum contract period, even though they should only be paying for calls.
Ofcom has blamed providers for a lack of transparency when it comes to signing contracts and said that the situation is “unacceptable”.
The regulator is considering options to address the problem and bring certain providers to heel.
One option is a potential requirement for operators to break down the different parts of the package to highlight effectively what the customer is buying, while another would be to force operators to put customers on cheaper tariff at the end of contracts, once the handset has been paid for.
Ofcom also said that consumers should be automatically notified when they have finished paying for the phone itself, although some operators, such as O2, already operate with such a policy.
Lindsey Fussell, Ofcom Consumer Group Director, said: “Mobile customers should get the best possible deal. We’re concerned that people are not told, or cannot tell, exactly what they are paying for.
“So, we are extending our work on behalf of mobile customers to ensure that handset charges are clear and fair – not just when they enter a contract, but also when their minimum period is up.”
Citizens Advice said in September that customers were being overcharged by as much as £500m.
Its Chief Executive Gillian Guy commented: "While greater transparency around pricing would be a step in the right direction, what people really want is not to be charged for products they already own.”
“Companies should automatically stop charging people for handsets once they've paid them off. Of Ofcom's proposed solutions, this is the only one that would make sure people aren't unfairly overcharged.”