Survey Finds UK Mobile Operators Slow to Tackle Overpayments

A new survey of 4,006 UK adults, which was conducted by consumer magazine Which? in July 2020, has found that 36% of mobile customers whose bundled airtime contracts (handset and mobile tariff) have ended in the last 2 months are still overpaying on their bill. This is despite many operators pledging to tackle the practice.

Most mobile network operators will offer consumers a choice of either taking a SIM-Only plan (i.e. you just pay for the text/data/calls or mobile broadband plan of your choice) or a bundle with a mobile handset (airtime plan). The advantage of a bundle is that it enables consumers to spread the cost of their handset and mobile plan across the contract term (12-24 months), which makes the high cost of some devices more manageable.

Until recently the main problem with this approach was that, at the end of your contract term, many operators would keep taking the same monthly payments as before (i.e. you’ve already paid off the cost of the handset but the operator is still asking you to pay for it). At this point a wise consumer would switch to a SIM-Only option or change plan / operator but not everybody does that.

Last year Ofcom estimated that around 1.4 million UK consumers were out of their contract and still paying instalments towards a handset that has already been paid off – equating to consumers paying £182 million a year more than they should. The regulator moved to tackle this by extracting a series of commitments from Virgin Media, Tesco Mobile, O2, Vodafone and EE (here), which were introduced from February 2020.

The only major mobile operator NOT to sign-up was Three UK, which “refused to apply any discount to its out-of-contract customers” and Ofcom thus feared they would “continue to overpay and will not receive similar protections if they stay on their current deal.”

Survey Results

As above, some 36% of mobile customers whose airtime contracts have ended in the last two months are still overpaying on their bill and that’s partly due to the differences in how operators have implemented their commitments to Ofcom.

Obviously, the worst hit were customers of Three UK, with some 43% of those whose contracts have ended in the last 6 months claiming they saw no price drop at the end of their term. The figure drops to 40% for EE and 31% for Vodafone, which is partly because those two operators chose to only reduce their prices for customers once they’ve been out contract for more than 3 months (e.g. EE only reduce prices by 10%).

Customers on O2, Tesco Mobile and Virgin Mobile are less likely to face such hefty overpayments, as these providers told customers they would see their bills reduced to the equivalent of a 30-day, or best available, airtime deal once their original term had ended.

We should point out that all mobile and broadband operators are now required to send End of Contract Notification Letters once customers reach the end of their term, which makes them aware of how much they’re currently paying and what other options are available. But many people still choose not to make any changes to their mobile plan.

Overall, there has been good progress this year, but clearly certain mobile operators are trying harder than others to be fair with their customers. Admittedly it’s not always easy deciding which SIM plan to move airtime customers on to at the end of their term, particularly as the available plans may change over the length of such contracts, but others have shown that this is not an insurmountable obstacle.

Speaking in response to the survey, EE said that it was “entirely wrong” to suggest that they aren’t fulfilling their commitment to Ofcom’s fairness measures. The operator pointed out that, since May 2020, “we automatically give handset customers a 10% discount off their monthly bills once they have been out-of-contract for three months. We ensure customers are fully informed about their contract pricing and send reminders to encourage them to choose the right deal for them when their contract ends.”

Meanwhile Three UK said they have some of the market’s lowest prices and “always put customers first.” The operator added that “applying an arbitrary discount to tariffs will not effectively tackle what really matters – helping customers to find a contract which is both best-suited to their needs and priced fairly is what we do.”

Finally, Three said they allow their customers to “choose what they do when they reach the end of their fixed term commitment. To ensure that they can make an informed choice, we send all customers a notification before the end of their contract which shows them what they are paying for now, what an equivalent SIM only tariff is and also a SIM only tariff based on their actual usage.”

Sadly, Vodafone chose not to comment.