MILLIONS of mobile phone customers are hit by inflation-busting price rises each year.
But a crackdown on the practice is expected within days, as regulator Ofcom wants firms to be clearer about any planned increases.
6
This week, Ellie Smitherman reveals what the proposed changes mean for you and how to keep costs low.
FIXED CONTRACTS
MOBILE firms have come under fire for above-inflation mid-contract price rises on fixed contracts for the past four years.
Due to clauses in contracts, providers can impose annual rises, usually in April.
READ MORE MONEY SAVING TIPS
The hikes are tied to either the Consumer Price Index or Retail Price Index inflation rate, which has soared during the cost-of-living crisis.
It means millions of customers faced hikes of up to 8.8 per cent this year — adding as much as £50 to bills.
Firms argue that they need to be able to increase prices to keep up with rising costs.
But consumer experts argue that a fixed contract should live up to its name — and stay fixed.
Most read in Money
WORTH IT We came up with bizarre way to save thousands on bills - our neighbours HATE it
HELPING HAND New summer cost of living payments worth up to £470 for those on low-incomes
PUB PAIN Pub-goers’ favourite draught beers could vanish under new zero-alcohol plans
SHOP DROP Major supermarket chain confirms exact date it will shut 'always packed' branch
Scott Dixon, of website thecomplaintsresolver.co.uk, says: “A contract should do what it says on the tin.
“It’s unreasonable to expect consumers to budget for unknown price hikes that move with inflation, which changes from one month to the next.
Easy ways to slash your mobile bill
“This insidious practice should have been banned long ago and could be classed as an unfair term under the Consumer Rights Act 2015.”
NEW RULES WILL HELP CUSTOMERS
THIS week, firms will be ordered to lay out clearly — in pounds and pence — any proposed price rises during fixed contracts.
This would ban firms from including any inflation-linked or percentage-based price rises on all new contracts.
The new rules, which have been consulted on by Ofcom, should come into effect by October if current plans go ahead.
Ofcom chief executive Dame Melanie Dawes said: “At a time when household finances are under serious strain, customers need prices to be crystal clear.
“But most people are confused by the unpredictability and complexity of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.
“Our tougher protections would ban this practice once and for all, giving mobile customers the clarity and certainty that they need to secure the best deal to suit their needs and budgets.”
WHAT DO FIRMS DO NOW?
AROUND 70 per cent of all customers use the four big providers: EE, Three, Vodafone and O2 — as smaller firms piggyback off these networks.
Three, Vodafone and EE use the CPI inflation figure and increased prices by 7.9 per cent in April. O2 used January’s RPI figure, increasing prices by 8.8 per cent in April.
6
6
EE and Plusnet, part of BT, have now said they will no longer raise prices based on inflation — and will instead display them in pounds and pence.
There is a decent selection of providers who do not raise prices mid-contract, such as Giffgaff, Smarty, Lycamobile, Voxi and Lebara.
Rocio Concha, Which? director of policy and advocacy, branded April’s hikes “shameless” and said customers are trapped between the price rises and high exit fees.
She told Sun Money: “BT and EE's move towards fixed price rises shows there’s nothing stopping major telecoms firms from banishing unpredictable mid-contract price hikes now.
“Ofcom must not be fooled by industry delay tactics and stick to its proposed four-month timeline for implementing a ban on these practices.”
BAG A CHEAPER DEAL
YOU could save hundreds of pounds simply by switching mobile deals if you are out of contract.
Sabrina Hoque, telecoms expert at Uswitch.com, said: “Customers should not rest on their laurels and should consider shopping around to avoid overpaying.
“For those nearing the end of their mobile deal, Uswitch data shows that customers could save £321 per year by changing to a Sim-only contract when they reach the end of a 24-month handset contract.”
If you do not need a new mobile when out of contract, then a Sim-only deal will be the cheapest.
The best deal available at the moment is Lebara Mobile’s 5GB of 5G data at £1.48 for the first three months, increasing to £4.95.
If you are happy with your provider, it might still be worth doing research on comparison websites, such as MoneySupermarket and Uswitch, to then haggle a better deal.
If you do switch, don’t forget to check whether it is cheaper to buy a new handset outright or sign up for a new fixed contract.
Investigate cheaper social tariffs if your household is on a low income.
If anyone in your household is on Universal Credit, you will be able to claim one.
Providers including Voxi and Smarty both offer these cheaper social tariff mobile phone contracts — with prices starting at £10 a month.
6
‘Rises are joke, makes me want to cancel’
EE customer Chloe Brasier’s bill has gone up £60 a year after it was hiked from £65 to £70 a month.
This is £14 more a month than when the retail supervisor first took out her contract at around £56 late in 2022.
Chloe, 24, from Burgess Hill, West Sussex, said: “It’s a joke, this isn’t the first time it’s happened. It makes me want to cancel and find a cheaper deal.”
At least, with EE, she is one of the few customers told how much her bill is rising in pounds and pence.
Chloe said: “It is more helpful.”
DRIVE DOWN OAPS’ CAR COVER COST
PENSIONERS are being priced off the road by rising car insurance costs.
The average amount quoted to over-65s has jumped 43 per cent in one year, to £478 per annum, according to comparison website Quotezone.
6
However, there may be a way to dodge soaring bills.
Drivers can save up to 45 per cent on premiums if they renew at the right time.
Experts from Quotezone say the cheapest time to renew a policy is 15 to 24 days before the existing one expires, saving between 33 to 45 per cent.
Greg Wilson, chief executive of the site, adds: “Drivers generally get notified a month before the policy is about to expire, and that’s the perfect time to start shopping around and comparing different providers.
“Even if they stick with their current insurer, obtaining quotes from other companies may help them save money.”
Drivers should get quotes from at least three comparison websites – as well as insurers who don’t appear on them, such as Direct Line.
It may also be possible to haggle with your existing insurer.
CLAIM YOUR CREDIT WHERE IT’S DUE
FROM Monday, more than 100,000 households claiming housing benefit will be asked to switch to Universal Credit.
Universal Credit is replacing all “legacy benefits” under a process called managed migration.
6
Affected households will get notices in the post telling them how to move to Universal Credit, as the switch is not automatic.
From the start of June, the Department for Work and Pensions will begin contacting those claiming housing benefit.
It’s vital that households apply for Universal Credit within three months of receiving their managed migration letter.
Failing to do this can result in benefits being stopped.
But it’s important to note that not every claimant will be asked to make the move.
If you claim housing benefit and are over the state pension age (66), you will not be asked to take up Universal Credit.
You cannot claim UC if you are over the state pension age.
READ MORE SUN STORIES
Pensioners can still make a fresh claim for housing benefit – and nearly 300,000 households are missing out on up to £4,338 in this support.
You can check your eligibility by visiting benefits-calculator.turn2us.org.uk.
