All mobile phone users are being told there is a major change to their contracts this week – and that a third of people are ‘out of contract’ and paying about 25 per cent too much. Speaking on BBC breakfast Ben Boulos explained that people need to take action.
And from this Friday all mobile operators including O2, Virgin Media, Three, Plusnet, Vodafone, EE and BT are being banned by Ofcom from using mid-contract price rises that are linked to inflation. January is a popular time for getting a new phone, Mr Boulos said, and around 1.6 million mobile phone contracts are due to expire this month.
He added: “And those affected are joining a pretty big club because more than a third of all mobile phone users are actually out of contract, and a similar number of broadband customers are in the same situation. Now if that’s you, your bills are on average around 18% higher than those who’ve signed up to a new deal or perhaps even switch provider when the initial deal ended.”
Ernest Doku from Uswitch said: “12 months or 24 months is a lifetime, and so when you reach the end of your contract, the mobile market has changed dramatically. So being armed with that information in terms of what you’re paying at the moment and when your contract ends, re-engaging, checking on comparison sites to see what the deals are available in the market, even going back to your existing supplier, a lot of these providers do offer really strong retention deals to keep you, just really the the key message is re-engaging with the market as soon as it’s possible to do so.”
Mr Boulos added: “Now, this next bit is quite important to know because from Friday, mobile and broadband providers will be officially banned from surprise price rises in the middle of a contract. You know those ones where they take the inflation rate and then add 3.9%. Just for good measure. Well, they’ll need to tell you at the time you take out the contract, at the very beginning, exactly what those increases will be in a clear and comprehensible way. Basically telling you in pounds and pence so you can budget for any monthly cost increases.
“So the overall advice is shop around for the best deals, keep an eye on your contract, and make sure you act before it expires.” Broadband and mobile companies were previously allowed to increase prices mid-contract every April in line with inflation, plus up to 3.9% extra on top of this. This saw millions of people hit by bill rises of up to 17.3% in 2023, after inflation surged to a 41-year high that year.
But speaking on his Martin Lewis Money Show Live on ITV, the consumer expert explained how this only applies for new contracts and renewing contracts – and said households could still end up being subject to big future price rises. Martin said: “It still allows them to do above-inflation increases because as long as they tell you what it is, they can put it up £20, but it is an improvement in terms of transparency.”
He added: “If they don’t tell you the pounds and pence figure, you can leave when they announce a price rise. You can breach your contract, you’ve got 30 days to go. If you do want to leave them, or if you want to haggle to stay, that is your opportunity.”