Money expert Martin Lewis has slammed O2 for announcing unexpected price hikes which will affect up to 15.6 million customers next year.
The mobile provider will be increasing monthly payments by £2.50 for all customers in April, a 40 per cent increase from the £1.80 that had been indicated on contracts.
Telecoms regulator Ofcom brought in new rules in January designed to discourage surprise mid-contract price hikes like these.
Phone providers now must tell customers exactly how much their billing will rise over the duration of the contract, or let customers end their contracts if a greater increase in announced. Sky confirmed it would choose the latter option for its broadband deals at the time, with O2 now appearing to take a similar stance.
While the mobile provider has not contravened the rules – as it is allowing customers to leave – Mr Lewis has reacted furiously, saying the decision makes a “mockery” of the new guidelines.
“It’s absolutely ridiculous”, he told ITV’s Good Morning Britain. “O2 should be hanging its head in shame, and I say most of its customers should be out there now, because you can leave penalty-free once you’ve been notified of this, checking if you can get a cheaper deal elsewhere.”
He later added: “The worry is now O2 has opened the door to this behaviour other mobile firms will feel less worried about following suit. It’s a great regret that when Ofcom consulted on these changes it didn’t listen to the proposal I and others made to simply ban above-inflation, mid-contract price rises (or any mid-contract rises).”
Ofcom has said it is “disappointed” by O2’s decision, which “goes against the spirit” of the rules.
“Today, we’ve written to the major mobile companies reminding them of their obligations to treat customers fairly.” It said in a statement. “We encourage any customer who wants to avoid these price rises to exercise their right to exit without penalty and sign up to a new deal”.
The regulator advises consumers remember that their mobile provider must give them 30 days’ notice of any price increase beyond what was agreed in the contract, and must be allowed to exit their contract penalty free in this case.
This will enable them to shop around for a new contract with any provider, with Ofcom advising using comparison sites to ensure the best deal can be found.
An O2 spokesperson said: “As acknowledged by Ofcom in its letter to providers, its rules do not prevent companies from increasing annual price changes – for example, to invest in improving networks. The changes we have announced in no way breach any regulatory rules.
“We appreciate that price changes are never welcome, but demand for mobile connectivity is greater than ever, and any price change customers see on their bills is greatly outweighed by the £700m we invest each year into our mobile network to meet this growing demand. We have written directly to customers about this change, and they are able to exit without penalty if they wish.”
