Tmobile price increase

RandomCurve

My opening letter to OFCOM 29th MAY

Dear Graham,
In my email to you of 10th May in regards to ofcoms statement that EE have acted reasonably with regards to T-Mobiles recent price rise (for which you asked Lauren to respond on your behalf) the Ofcom response to the following question:
“Who did you commission to examine the terms and conditions?” was as follows:
“Ofcom is aware of the issues you have raised and we have looked at the terms and conditions in question. However, your complaint appears to relate to how the terms and conditions have been applied rather than the terms themselves”.
The above response expressly states that Ofcom have already “looked at the terms and conditions in question” (in isolation – not as they are applied) and has found them to be “reasonable” (I’m not sure what Ofcom (the REGULATOR) means by “reasonable” – I thought a term was either FAIR or UNFAIR), therefore you should be able to respond to my request for information below very quickly.
In relation to Clause 7.2.3.3 in version 59 of T-Mobiles T&Cs can you confirm the following for me (for the avoidance of doubt I am NOT asking you to comment on how the term has been applied):
1 - What does Ofcom mean by “reasonable”?
a - How does Ofcom define reasonable? Please explain in a manner that enables a consumer to determine if the T&C is fair or unfair when the definition is applied to a stand-alone T&C (i.e. without looking at how it has been applied), and without a need for the consumer to seek legal advice?
I - Should your explanation to the above be that you can only consider if the T&C is reasonable by looking at how it has been applied – and you have already stated that ofcom does not do this – on what basis did ofcom determine that EEs T&Cs are reasonable?
2 - Why does Ofcom use the term “reasonable” and not FAIR or UNFAIR?
a -As regulator with a stated principal duty of “furthering the interests of citizens and consumers” Ofcom must be seeking to add as much clarity into contracts as possible and the clear legal definitions are “fair” and “unfair.”
3 - What was the rationale used to decide that the EE clause on price rises and consumer rights to penalty free cancellation was considered “Reasonable”?
4 - What is ofcoms view (as regulator and with your principle duty of “furthering the interests of citizens and consumers”) on if the EE clause on price rises and consumers rights to penalty free cancellation term is FAIR or UNFAIR?
Once again for the sake of clarity the questions above ARE NOT to do with how the clause was applied, but how the Clause was assessed, and how the conclusion was reached by ofcom.

The clause in question reads as follows:
7.2.3.3. The change that We gave You Written Notice of in
point 7.1.4 is:
(i) an increase in Your Price Plan Charge (as a percentage) higher than any increase in the retail price index (also calculated as a percentage) or any other statistical measure of inflation published by any government body authorised to publish measures of inflation from time to time, and published on a date as close as reasonably possible before the date on which We send You Written Notice; and
(ii) You give Us notice to immediately cancel this Agreement before the change takes effect.

My interpretation - WITHOUT referring to the application of the clause - is that the clause is UNREASONABLE - which to me means UNFAIR under the OFT guidance 12.4 and 19.3, as endorsed by OFCOM.

Page 58 of the OFT guidance, relating to price variation clauses, states:
12.4 A degree of flexibility in pricing may be achieved fairly in the following ways.
• Where the level and timing of any price increases are specified (within narrow limits if not precisely) they effectively form part of the agreed price. As such they are acceptable, provided the details are clearly and adequately drawn to the consumer's attention.
• Terms which permit increases linked to a relevant published price index such as the RPI are likely to be acceptable, as paragraph 2 of Schedule 2 to the Regulations indicates, subject to the same proviso.
This T&C CLEARLY falls foul of this rule as the timing of the price rise is NOT specified – either precisely or within narrow limits.
Whilst the customer knows that TM have to use a rate published BEFORE the date in which they write, there is no clarity as to how quickly TM have to inform the customer of the rate it is using – the term “as close as reasonably possible” could mean anything from 1 week to six months plus, depending on a legal argument on what is and is not “reasonable”, therefore the consumer has no possible basis for cancelling a contract without penalty, without resorting to legal argument.
In addition given that TMhas total control over all of the variables associated with the price rise:

• TM alone drew up the T&Cs –there was no customer negotiation;
• TM has the sole power to decide which months RPI to use;
• TM has the sole power to decide when to send its price rise letter; and
• TM has the sole power to decide the date a price rise is effective from.

there is no possible reason why TM would need to include the word “reasonably”. The lack of a narrow limit on the timing of the term can only ever be used to the customers’ detriment and to give TM the ability to choose an RPI which best suits its profit line, i.e. TM could wait for two/three/four months and then choose the highest RPI in that period to apply - This is clearly unfair under the OFT guidance 12.4 (as endorsed by Ofcom) as stated above.
Further to the above how did Ofcom conclude that the new TM term “…..as close as reasonably possible…” was a narrower and more precise time definition (as required by OFT guidance on unfair contracts terms 12.4) than the clause in T-Mobiles previous T&Cs (pre 30th October 2012) “…..for the 12 months before the month in which We send You Written Notice”? i.e. to me it appears that TM have moved further away from complying with OFT 12.4 not moved closer to complying with OFT 12.4.

The T&C is also not compliant with Page 86 of the OFT guidance (endorsed by Ofcom), relating to plain and intelligible language, which states:
19.3 It follows that what is required is that terms are intelligible to ordinary members of the public, not just lawyers. They need to have a proper understanding of them for sensible and practical purposes. It is not sufficient for terms to be clear and precise for legal purposes, except in contracts normally entered only on legal advice.
The lack of a clear qualifier as to how far in advance an RPI is published means that the customer has no way of knowing what RPI TM can or cannot use. The current qualifier “as close as reasonably possible” makes the time frame ambiguous and therefore an unintelligibleclause until it is applied and fought over by lawyers – ordinary members of the public would not be able to agree “reasonably” with TM, without having to resort to third party (CISAS/Courts) for guidance. As Ofcom have already stated they do not consider how a term is applied, then the term as a stand-alone term has to be unfair. For this term to be FAIR as a stand-alone T&C the phrase “published before” needs a more specific quantifier i.e. “published in the month before we write to you”, or “published two months before we write to you”. Therefore this term is clearly ambiguous as a stand-alone T&C, and is not compliant with OFT guidance 19.3 (as endorsed by Ofcom).
I look forward to receiving your response in due course, and would especially appreciate if you (Graham) would respond directly to me – a consumer.
Please bear in mind that I am interested in the specific legal arguments ofcom considered in determining that the clause was fair as a stand-alone clause - NOT as the terms have been applied.
As this is my second attempt to obtain a clear answer from you on this matter, I trust you will not hide behind either general platitudes, or some wish-washy argument that Ofcom can’t publish its rationale, but rather will embrace the opportunity to engage in a debate with consumers as to how Ofcom – the regulator with a principal duty of “furthering the interests of citizens and consumers” - considers and balances the legal arguments as to the fairness of a term in a stand-alone situation.
I shall raise the issue with the Parliamentary Ombudsman via my MP, should you attempt to side step my questions (which only relate to the T&Cs and NOT how they have been applied) by not providing clear and direct responses.

Regards

RandomCurve

MY follow-up email 2nd JUNE


Dear Graham,

No doubt you are aware of the findings of the Public Accounts Committee on the effectiveness (ineffectiveness) of the OFT.

I was struck by the startling similarities between the criticism of the OFT and how, from a customer perspective, ofcom has operated in relation to the current T-Mobile scandal where T-Mobile are clearly imposing a price rise higher than allowed under its T&Cs and the subsequent bullying of customers, and the whole matter of “fixed contracts” actually containing hidden price rise clauses. I have cited examples at the end of my email of the behaviour of T-Mobile, which Ofcom has judged as “reasonable” and the behaviour of ofcom as compared to the criticism of the OFT.

The above said the purpose of this email is to reiterate my offer to engage in a debate with ofcom as per my email to you of 29th May (reply still not received), and further to offer my assistance to Ofcom so that it can investigate the on-going situation with the current T-Mobile (and Orange in limited cases) price rise.

As a consumer – one of 2 million – who is currently suffering under the bullying* tactics of T-Mobile in its frantic attempt to cover up the error it has made in applying the wrong RPI to its customers, I implore you to contact me and discuss what has actually been happening (extract from the report on the OFT “The report adds that the OFT "needs better intelligence so it can prevent consumer harm and it should apply tougher sanctions more swiftly when it is aware of poor practice") I am prepared to be part of that intelligence for ofcom, and I know of others that will too – contact me.
*Bullying - use superior strength or influence to intimidate (someone), typically to force him or her to do what one wants.

I look forward to hearing from you soon so that I can assist ofcom (free of charge) in its role as regulator to ensure that you have all the necessary facts to investigate this matter proactively, effectively, and forcibly.

Regards


XXXXXX


Cited OFT failings that currently - from a consumer perspective - could be applied to Ofcom.
1 - “but the OFT hasn't taken the tough action needed to protect consumers.”. "ineffective and timid in the extreme" in tackling the problem.
When CPs introduced midterm price hikes the ofcom “tough action” was……..to hold a consultation! Ofcom could just have easily ruled that unless a CP can PROVE that it had clearly and adequately drawn to the consumer's attention the price rise clause then it is unfair per OFT rules para 12.4 (that would be more comparable with what happened in the endowment policy and PPI mis-selling scandals). Even the BBC has broadcast evidence that CPs do not comply with this rule, but still ofcom hides behind a “consultation”.

Page 58 of the OFT guidance, relating to price variation clauses, states:
12.4 A degree of flexibility in pricing may be achieved fairly in the following ways.
• Where the level and timing of any price increases are specified (within narrow limits if not precisely) they effectively form part of the agreed price. As such they are acceptable, provided the details are clearly and adequately drawn to the consumer's attention.

2 –[Margaret] Hodge says: "The Office of Fair Trading, the regulator of this sector, has been ineffective and timid in the extreme. It passively waits for complaints from consumers before acting.”
In many respects the OFT was actually better than ofcom at this. When I contacted you about T-Mobile using the wrong RPI in its May 9th price rise, rather than thinking – “they would have applied that to all 2 million customers we had better take a look” - ofcom simply pushed the matter under the carpet as follows “we can’t look at individual cases”.

3 - “Such disgraceful practices by the shabby end of the market cost borrowers an estimated £450million or more each year”
The disgraceful practices by the whole of the CP market with regard to hidden price rise clauses have probably cost customers several £100s of millions!

Background and examples of behaviour that CLEARLY demonstrate that T-Mobile has both increased its prices by a rate that triggers penalty free cancellation, and has since then acted in a most unreasonable manner to prevent customers exercise their rights.
The post Oct 2012 contract price rise term includes the phrase “….and published on a date as close as reasonably possible before the date on which We send You Written Notice” . Remember this is not an individual case, but is applicable to about 300,000 customers!

1. The price rise letter was received on 6th April stating “current RPI 3.3%”
2. The actual current RPI was published 19 days before on 19th March and was 3.2%
3. T-Mobile have always referenced their price rises to the February RPI rate and applied them from 9th May.
4. At first TM claimed to have used January RPI 3.3% – published on Feb 12th 54 days before the letter was received.
   1. Orange used the January rate and wrote to customers on March 4th!
5. On 16th April (10 days AFTER the letter was received) The March RPI was published 3.3%
6. From 16thApril suddenly TM claim that hay had “anticipated” the March rate and it is the March rate that applies – three things:
   1. 1. March rate was published 10 days AFTER they wrote to me and 300,000 other customers – not before they wrote, so why is TM insisting that they can use the March rate?
      2. If TM had anticipated the March rate why did they, between 6th and 16th April, insist they had not used an incorrect RPI because they were using the January RPI (and not just customer services but the executive office too) – do they not know what month they are basing such an important decision on?
      3. Can ofcom ask TM to provide a copy of the Board minute where Olaf Swantee sanctioned a department within EE to calculate the March RPI for use in its planned May 9th price rise (there is no way it could have taken this course without such a minute) - if TM actually provide you with one (they won’t) I will you show you why it is a fake.
7. The mere fact that T-Mobile changed their explanation of which rate was used, must raise the suspicions of an alert and proactive regulator.
8. On asking for immediate cancellation, you are refused – in fact on the number you have to call NOBODY has the authority to cancel a contract penalty free – neither can they transfer you to someone who does
9. Under clause 4.4.5.1& 2 if you are in genuine dispute with TM you can write to them and withhold payment – I wrote – they continue to call on the Direct Debit –I am not the only customer they have done this to.
10. I made it clear that I wanted to terminate “penalty free” and need a PAC code
    1. T-Mobile issued a PAC code and took £246.98p from my account as an early termination charge – I never used the PAC code, and it was only ever requested on a penalty free basis – so a breach of the unsolicited goods and services act – again I am not the only customer they have done this to.
    2. TM have agreed to refund the £246.98, that was over a week ago – and still no refund
11. TM refuse to issue deadlock letters thus preventing customers going to CISAS immediately – obviously in the hope that if customers have to wait 8 weeks they will lose interest
12. TM “Lent” on CISAS so that cases it had already agreed to take as falling under its remit suddenly became outside of it remit –with this most ridiculous rationale from CISAS:
    1. 'This case should be withdrawn. The increase in RPI is a business decision which CISAS cannot consider. Further, CISAS cannot consider whether there has been a breach of contract as asserted, as this cannot be reviewed without also examining the price increase. The issues cannot be separated therefore the claim is outside the scope of the scheme.'
       As everything a company does is a business decision, then CISAS can rule on nothing – so why does it exist?
13. Ofcom should be asking “why is a contract taken out after 1st November 2012 (maximum 5 months before the price rise letter was sent – 3.5 in my case) having an annual inflation rate applied to it on May 9th?”
    1. Answer – TM are applying the price rise, but crediting back the increased amount until November, thereby circumventing any decision that ofcom may announce declaring price rise clauses invalid – Yet more sharp practice from the “dominant” player in the market!

I have evidence for all of the above and more – and remember it is 300,000 customers being bullied/conned/misled into not exercising their rights to cancel. And there are another £1.7milion customers on Pre Oct 2012 contracts who are also being treated in the same way who also appear to have a strong case for penalty free cancelation, or at any rate should be being protected from the disgraceful behaviour of T-Mobile in this matter!

RandomCurve

First response from OFCOM - which I thought was quite promising so I chanced my arm and introduced V58 into the scenarios.

07 June 2013

Dear XXXX

Thank you for your emails about T-Mobile’s price increase. I am currently in discussion with a colleague about this matter and I will be back in touch shortly.

Yours sincerely

Sandra Sutton
Consumer Contact Team

RandomCurve

8th June - my first introduction of V58 T&Cs

Dear Sandra,
Thank you for your email below, I hope that your colleague is aware that I am more than willing to help supply evidence and discuss this situation with ofcom should you require some help.
My emails to you so far have been regarding Version 59 of the contract (effective 30th October 2012) because in those T&Cs it is clear that T-Mobile have to use a rate published BEFORE they write, but they insist on using a HIGHER rate published after they wrote - some 300,000 consumer are adversely impacted.
I would also now like to introduce the slightly more complex, but equally incorrect interpretation of the price rise clause in version 58 of the contract (PRE 30th October 2012) while your colleague is looking into the current T-Mobile price rise - this contract impacts 1.7million consumers.
I realise I run the risk of Ofcom deeming the below as relating to how the clause has been applied, but please read through before jumping to conclusions, as there is a serious abuse of power being applied by the dominant market operator which is to the determent of 1.7million customer’s.
The Pre Oct 2012 T&Cs have been in force for a number of years and below is a comparison of how T-M applied those rules in 2012 and how it has applied them in 2013 – you will see they have been applied DIFFERENTLY in both cases to give T-Mobile the higher rate in each year at the consumers expense.

2012
2013

Feb RPI Published

20-Mar
19-Mar

Feb RPI Rate

3.70%
3.20%

March RPI Published

17-Apr
16-Apr

March RPI Rate

3.60%
3.30%

T-M price rise Letters sent

28/3 to 4/4
2/4 to 8/4

Price Rise effective

9th May
9th May

Red = the higher rate used by T-Mobile

• The RPI publication dates are identical bar 1 day
• The T-Mobile letter dates are within 4 days of each other, and
• The price rise is effective from the same day

The above begs the question why in 2012 were T-Mobile using the higher February RPI, and now in 2013 they are using the higher March RPI (which was unpublished at the time the price rise letters were sent)?
The above is clear evidence of the dominant market player manipulating its T&Cs to the determent of the customer to either:

1. Use ambiguity to apply the highest rate possible, or – as I believe -
2. Is evidence that T&M are manipulating the facts to cover up that they have imposed a price rise at a level that triggers a customer’s right to penalty free cancellation.

Additionally the RPI rate to use is supposed to be the ANNUAL rate so if T-Mobile used February last year, then it stands to reason they should be using February this year.

Can Ofcom include a review of the above blatant manipulation of T&Cs by the dominant mobile operator whilst reviewing the version 59 T&Cs?

Regards

RandomCurve

A follow-up sent on 13th June

Dear Graham,

As you are aware the current situation regarding T-Mobiles price rise is a live and on going situation and therefore action needs to be taken on an urgent and timely basis. I have sent two emails (on 2nd and 8th June) since the email below offering my assistance to Ofcom (which I have not copied the media into), and I have had a reply (from Sandra) stating that Ofcom are looking into this. Given the urgency, and given Ofcom have stated that they had already reviewed the T&Cs below can you give me some indication of when I am likely to receive a reply? I am keen to continue to try and gain the involvement of the media in this situation, as I believe the only way a meaningful resolution will come about for ALL of T-Mobiles customers (including those who have thus far been too bamboozled by TMs behaviour to have requested cancellation) is - unless Ofcom act - to get this into the public arena.

I do not want to paint Ofcom in a bad light if you are actually doing something constructive behind the scenes, but as you have yet to contact me to either take me up on the offer of help (it has been 2 weeks since the first offer), or to point out why I am wrong in my assertions below (2 and half weeks) I have no way of knowing what is happening. Can you email or call me (07XXXXX) tomorrow to give me an update?

Regards

RandomCurve

Another follow-up on 18th June. As you can tell I was by this stage getting a bit narky about being ignored. This is also the day I spend 40 minutes on the phone to Ofcom and FINALLY convinced them that this has nothing to do with an INDIVIDUAL case, and nothing to do with the general dislike of price rise clauses. They promised to respond in full by 28th June - and they did!!!

Dear Graham.
Oh dear. Despite offering to help Ofcom and supplying you with enough details to be proactive (I have sent you two emails without copying in the media offering you my full FREE assistance), it seems that your inactivity may now leave Ofcom on the back foot - defeat snatched from the jaws of victory????
You are probably aware by now that CISAS has found in favour of customers on both versions of the T-Mobile contract that T-Mobile have acted inappropriately in their attempt to introduce a mid term price hike and are allowing penalty free cancellation. Not sure what Ofcoms next move is seeing as you have already dismissed anybody who has informed Ofcom that something is wrong that it is an individual case - and have stated to the press that TM (EE) have acted reasonably.

So now we will find out what Ofcom is really made of:

1. Will you continue to hide away (thereby being perceived by the public as a stooge for the industry) and allow 2 million customers who could have cancelled their contracts -but did not due to TMs tactics and ofcoms complicity by stating that all was above board while customers still had a chance to cancel - be subject to an out of T&C price rise? Or
2. Will you actually do something to protect the consumer and force TM to write to EVERY customer affected by the "illegal" price rise to offer them a chance of a penalty free cancelation back dated to Mid April?

I guess you will be judged by your actions (or in action)

I look forwarded to reading your response in the press shortly as well as your response to this email.

One good thing to come of this is that with the research I have put in I am convinced that rather than Ofcom "conducting a consultation" on mid tem price hikes you should have acted much more aggressively to disallow them (and STILL CAN - including back dating!), but I'll give you a chance to weather this storm first.
Regards

RandomCurve

18th June was a busy day!

Graham,

Just to confirm. Following a phone call to Ofcom today I was promised a full response to all of my earlier emails by no later the Friday 28th June. I also made it clear that this is not an individual case it effects 2 million+ customers who have contracts with TM. Additionally as I explained (about 5 times) on the phone the Ofcom consultation on mid term price increase is NOT relevant here. The TM contract under clause 7.1.4 does allow TM to increase its prices mid term - and that is not the argument. This issue is that TM have MISAPPLIED that term and have therefore invoked the right of 2 million customers to leave penalty free. TM have then set about making the issue as complex as possible to dissuade customers from exercising their cancellation rights, and Ofcom have been complicit by publically stating (7th May http://www.moneysavingexpert.com/news/phones/2013/05/t-mobile-users-attempt-to-escape-price-hike) that Ofcom had reviewed the situation and EE had been reasonable!

My earlier email were sent on:
29th May
2nd June
8th June
13th June and
17th June

Can you also be clear on what action Ofcom intends to take on this particular matter.


Regards

RandomCurve

This s the REALLY INTERESTING LETETR - See how many times you can spot TM misleading Ofcom by comparing what it tells Ofcom and what they tell us!

28 June 2013

Dear XXXX

We are writing in response to your emails to Ofcom of 29 May, 2 June, 8 June, 13 June and 18 June 2013. We comment below on the general issues that you have raised and also your individual complaint against T-Mobile.

Version 59
We note your concerns in your email of 29 May in relation to Clause 7.2.3.3 in version 59 (v59) of T-Mobile’s terms and conditions and the potential flexibility it provides in relation to price variations. You have asked a number of questions about the basis on which Ofcom looked at this clause.

We have not made any determination as to whether or not the clause referred to above is fair or unfair under the Unfair Terms in Consumer Contract Regulations 1999 (“UTCCRs”) and have not commented on the reasonableness or otherwise of T-Mobile’s terms and conditions. We looked at the clause in question and asked T-Mobile to explain the RPI figure it used to calculate the price rise in accordance with this clause. We considered that the approach T-Mobile have taken on this occasion is reasonable (in the context of T-Mobile’s explanation that it had used January’s RPI and the wording of the clause “published on a date as close as reasonably possible before the date on which We send You Written Notice”).

Whilst Ofcom has the power to consider contract terms for fairness under the UTCCRs, we cannot resolve individual consumers’ disputes with traders about particular terms in specific contracts. Nor do we determine if a particular term is fair or unfair. Only a court can do that. In cases where we think a term is unfair, we may take enforcement action on behalf of consumers generally (as a group). This action could include seeking undertakings from a trader that it would not use unfair terms in its contracts with consumers, or seeking a court order preventing such use.

We note your comments in relation to the potential ambiguity of the clause itself and the potential for this to be considered to be unfair. In this context, we are considering whether further action by Ofcom may be appropriate, in line with our administrative priorities, as set out in our Enforcement Guidelines[1].

Version 58
We also note your concerns in your email of 8 June in relation to version 58 (v58) of T-Mobile’s contract. Paragraph 7.2.3.3 in v58 states: “The change that We gave You Written Notice of in point 7.1.4 is an increase in Your Price Plan Charge (as a percentage) higher than any increase in the Retail Price Index (also calculated as a percentage) for the 12 months before the month in which We send You Written Notice and You give Us notice to immediately cancel this Agreement before the change takes effect.”

In 2013, notifications were issued in April and the 12 month period prior to the month of notification would be April 2012 to March 2013. T-Mobile explained that it has used the March 2013 RPI (which is the 12 month rate[2]) to calculate the price increase in v58. In 2012, the notifications were issued in March (except for a small number in April) and the 12 month period prior to the month of notification for all those notified in March would have been March 2011 to February 2012. It therefore appears that T-Mobile has applied the term consistently in 2012 and 2013 by using the RPI figure which relates to the 12 months before the month in which customers were notified.

Regarding your point that T-Mobile’s use of the February 2012 RPI figure should mean that T-Mobile’s price rise in 2013 should be based on the February 2013 figure, we note that T-Mobile’s terms and conditions do not limit the company to annual price changes. Consumers’ concerns regarding lack of clarity in relation to the frequency of price changes in CPs’ terms and conditions is an issue being considered by Ofcom as part of its consultation on mid-contract price rises (see below).

T-mobile’s complaint handling
We note your concerns in relation to T-Mobile’s handling of complaints about its price rise, specifically:
· T-Mobile’s refusal to issue deadlock letters;
· allegations that CISAS has been “leaned on” by T-Mobile;
· T-Mobile’s issuing of a PAC code;
· T-Mobile’s application of its early termination charge and, in your case, a delay in provision of a refund and the nature of that refund i.e. in the form of a credit on your account, and
· T-Mobile’s explanations of the RPI figures it used.

In relation to the first bullet point above, Ofcom contacted T-Mobile and the company accepted that its advisors had been at fault in some cases in terms of not clearly signposting the availability of CISAS for customers dissatisfied with T-Mobile’s response to their complaint.

In relation to the second bullet above, Ofcom contacted CISAS when we became aware that it was not accepting complaints relating to how T-Mobile had applied its terms and conditions for its recent price increase. CISAS accepted that such complaints should in fact be considered by it and subsequently accepted a number of such cases.

We asked T-Mobile about their use of the March RPI figure for the post-October 2012 contracts (v59) which you refer to in your email of 2 June. T-Mobile confirmed that, in a small number of cases, its advisers had responded to complaints incorrectly due to a failure to correctly identify whether complaints related to v58 or v59 of its terms and conditions. It seems in your case (email copied to Ofcom on 6 June), that the advisor gave the incorrect information i.e. they said they used March RPI (which was the figure used for v58, as noted above) when they should have told you that they used the January RPI if you are on v59. Specific issues in relation to T-Mobile’s handling of individual complaints should be drawn to the attention of CISAS which can take such factors into account when deciding amounts of compensation. We understand that you have now taken your complaint to CISAS. Therefore, all the issues in relation to the handling of your individual complaint (in particular, the third, fourth and fifth bullet points) should be drawn to the attention of CISAS.

CISAS
Consumers have the right to escalate complaints relating to the application of terms and conditions in their contract with their provider through their provider’s complaint handling process and, ultimately, through the provider’s appointed redress scheme, in this case CISAS. CISAS has confirmed that it will assess complaints relating to how T-Mobile’s terms and conditions (v58 and v59) have been applied. This is in addition to any complaints raised in relation to customer service issues, for example, how T-Mobile has handled complaints. As mentioned above, we note the explanation given to you by T-Mobile in relation to how it applied v59 of its terms and would advise you to refer to that information, and your concerns about its complaint handling as noted above, in your correspondence with CISAs.

Ofcom’s consultation regarding mid-contract price rises
We note your complaint that you entered into the contract after 1 November 2012 but subsequently had an annual inflation rate applied on 9 May 2013. Part of the evidence considered by Ofcom when deciding to consult on proposals regarding mid-contract price rises was consumer complaints regarding price rises imposed by CPs shortly after consumers had entered into what they perceived to be “fixed” price contracts. Ofcom is currently considering responses to that consultation and we hope to publish a decision later in the summer.

Yours sincerely

Sandra Sutton
Consumer Contact Team

[1] http://stakeholders.ofcom.org.uk/consultations/draft-enforcement-guidelines/enforcement-guidelines/
2 See page 12 for twelve month RPI rates: http://www.ons.gov.uk/ons/dcp171778_308425.pdf


[1] http://stakeholders.ofcom.org.uk/consultations/draft-enforcement-guidelines/enforcement-guidelines/

[2] See page 12 for twelve month RPI rates: http://www.ons.gov.uk/ons/dcp171778_308425.pdf

RandomCurve

My response sent 1st July - I could not let Ofcom gloss over the details that easily, nor allow TM to MISLEAD our good friend the REGULATOR (Appendix 3)!

Dear Graham and Sandra,

Thank you for your email of 28th June in regards to the recent TM price increase. It is comforting to know that ofcom are now treating this matter in a much more serious manner than my previous contact with ofcom had lead me to believe. I was never expecting you to raise my individual case with TM as I am more concerned with the overall way that this price rise has been implemented and TMs subsequent behaviour, but thank you very much for doing so.


There are four main headings of observations/comments I have on your response to your email and in order to keep this email as brief as possible I have put each in separate appendices below. The concerns are:

1. Appendix 1 - Confirmation of the behaviour that ofcom considers reasonable in relation to the V58 contract – and the evidence that is based on;
2. Appendix 2 - Confirmation of the behaviour that ofcom considers reasonable in relation to the V59 contract – and the evidence that is based on;
3. Appendix 3 - Evidence that TM have misled ofcom as to their response to ofcom in regards to my individual case being a “simple mistake”;
4. The consultation on the general theme of mid term price rises and why ofcom have not taken tougher action.

I apologise in advance for the number of clarifications sought in each appendix below, but for appendix 1 and 2 it is important that I am 100% clear what behaviour Ofcom has considered reasonable to ensure that you have based that assertion on the correct facts (mainly because after 3 months of dealing with TM I know how they twist things –as you will see re appendix 3). For appendix 3 I am not looking for Ofcom to decide if I have been fairly treated or not by TM. I want Ofcom to be aware of how Ofcom itself has been mis-lead by TM and I would like to know what response Ofcom receives from TM when you challenge TM on its initial assertion that my case was an “isolated mistake”. Appendix 4 speaks for itself.

Finally please can you keep me updated on progress/decisions taken regarding the potential ambiguity of the clause in V59, and thank you once again for taking this matter seriously.

Regards



XXXXXX



Appendix 1.

Confirmation of the behaviour that ofcom considers reasonable in relation to the V58 contract – and the evidence that is based on.

a) It is reasonable for TM to send out a price rise letter that refers to an RPI that has yet to be published.
b) It is reasonable to state in the price rise letter that TM are using the “Current” RPI when they now claim they were using a “Future” RPI (at the time of writing the RPI that was in existence/of the now/ present was the February RPI, at that time March RPI was a future RPI)
c) It is reasonable that a letter that could have been written anytime since 1st March when TM announced a 3.3% price rise did not clearly articulate that a future RPI was being used.
d) It is reasonable that customers (V58) who queried the rate used between 4th and 16th April (i.e. before the March rate was published) were told that the January rate had been used.
e) It is reasonable that TM stopped answering customer queries between 14th and 16th April (when the March rate was published) whilst their legal team reviewed the price rise? –I can provide evidence.
f) It is reasonable that until 16th April (when the March RPI was published) TM did know which months RPI they had used?
g) It is reasonable that the time between the date of publication of the March RPI (16th April) and the introduction of the price rise (9th May) is less than the 30 days notice required for price rises as per ofcom rules?

h) It is reasonable for TM to simply apologise to ofcom for not issuing deadlock letters to customers, as effectively TM know that customers are likely to lose interest in the issue, therefore saving TM the cost of defending a CISAS case, and – if they lose allowing TM to keep customers on contracts who would have left.

1. What evidence have ofcom got as to the number of customers not given deadlock letters and the subsequent ”drop out rate” compared to CISAS claims?
   1. i. If for any reason you can not tell me what evidence was received can you at least confirm that ofcom has monitored the above.
   2. Will ofcom require TM to write to all customers who were not issued deadlock letters informing them that they should have been issued deadlock references and are now entitled to put in a CISAS claim?

i) What evidence did TM give ofcom that proved that they were referring to the March RPI when they announced the 3.3% increase in the press on 1st March?

1. If for any reason you can not tell me what evidence was received can you at least confirm that ofcom has seen evidence that supports the above.

j) What evidence did TM provide that prior to 16th April most customers on V58 contracts were informed that the March rate was being used (I know of none, but I know plenty who were told it was January until the March rate was published).

1. If for any reason you can not tell me what evidence was received can you at least confirm that ofcom has seen evidence that supports the above.

Appendix 2.

Confirmation of the behaviour that ofcom considers reasonable in relation to the V59 contract – and the evidence that is based on.

a) It is reasonable that TM required 37 days to write to customers applying the January RPI (excludes weekends and bank holidays)

1. The above is reasonable in light of the fact that Orange (part of the EE group) also applied the January RPI and they wrote to customers within 15 days (excludes weekends and bank holidays) i.e. TM required an additional 22 working days or 146% more time than Orange.

b) It is reasonable that TM were unable to inform customers of the February RPI even thought they had 12 days to do so, when In 2012 TM only took 6 days days to write to customers to implement the February RPI increase (both “days taken” figures EXCLUDE weekends and Bank holidays). i.e TM had 100% more time than in 2012, but are claiming it was not reasonable to write to customers in that time frame.

1. It is reasonable that TM claim that it was unreasonable to use the February RPI when the deadline of 9th May for the price rise is a TM imposed deadline. Nobody has forced TM to use 9th May as the price rise deadline, they could have just as easily have used 19th May as the implementation date if timing was an issue, but it is more reasonable to use the January PAST rate than for TM to have planned better and to have moved the price rise implementation date.

2.The above is CONCLUSIVE evidence that the V59 clause is indeed unfair and open to abuse by TM
c) It is reasonable to state in the price rise letter that took 37 days to prepare that TM are using the “Current” RPI when in they now claim to be using a “Past” RPI (at the time of writing the RPI that was in existence/of the now/ present was the February RPI, at that time January RPI was a past RPI)

1. It is reasonable that the price rise letter did not clearly articulate that the January RPI was being used?

d) It is reasonable that a clause that allows for an annual rate of inflation is allowed to overlap an annual inflation rate already used.

1. i.e. the last price increase referenced the February 2012 annual rate and therefore included January 2012 inflation, by applying the January annual inflation rate in 2013 TM have double counted the January 2012 inflation rate – they have effectively applied 12 months of inflation to an 11 month period, this is of obvious advantage to TM as the January annual rate in 2013 is higher than the February 2013 annual rate. The January 2013 rate should be adjusted to reflect 11 months (which the contract does not allow for), therefore surely the February (or later) RPI should have been used.

e) It is reasonable that TM can apply an annual inflation to a contract less than 6 months old (3 in my case), but then credit the increase back to the customers account until the anniversary of the contract, thereby circumventing any announcement that ofcom may make regarding the enforceability of mid term price rises in the summer.

1. i.e. it is reasonable that even if ofcom announces that price rises can’t be made after say July 2013 TM customers will experience price rises until April 2014 due to this tactic as the price rise has already been advised.

f) It is reasonable for TM to simply apologise to ofcom for not issuing deadlock letters to customers, as effectively TM know that customers are likely to lose interest in the issue, therefore saving TM the cost of defending a CISAS case, and – if they lose allowing TM to keep customers on contracts who would have left

1. What evidence have ofcom got as to the number of customers not given deadlock letters and the subsequent ”drop out rate” compared to CISAS claims?
   1. i. If for any reason you can not tell me what evidence was received can you at least confirm that ofcom is monitoring the situation.
   2. Will ofcom require TM to write to all customers who were not issued deadlock letters informing them that they should have been issued deadlock references and are now entitled to put in a CISAS claim?

g) What evidence did TM provide that most customers on V59 contracts who challenged which rate was used after 16th April were informed that the January rate was being used (I know of none, but I know plenty who were told it was March rate post 16th April).

1. If for any reason you can not tell me what evidence was received can you at least confirm that ofcom has seen evidence that supports the above.

Appendix 3.

Evidence that TM have misled ofcom as to their response to ofcom in regards to my individual case being a simple “mistake”
Please note whilst I do not necessarily expect ofcom to pursue my individual case with TM, I think you need to go back to TM and ask WHY they have DELIBERTELY mislead Ofcom as to the true situation as regards to TMs awareness as to which T&Cs I was on – I can only assume when responding to ofcom TM were banking on ofcom not coming back for evidence from TM –I would like to know TMs response to your follow-up investigation on this matter.

The responses that TM have given ofcom regarding my individual case are typical of the behaviour that TM has employed since it applied the wrong RPI rate to customer contracts. For TM to brush off their behaviour to me as a simple mistake is clearly nonsense if you are aware of the relevant correspondence between me and TM. I have attached two email exchanges between myself and TM (one between end April /Early May, and the other mid may). Both email exchanges clearly show that TM were 100% aware of which T&Cs I was on and confirm that whichever T&Cs I am on makes no difference to TMs corporate response – i.e mine is not an isolated mistake.
From review of the attached correspondence it is clearly ridiculous for TM to tell ofcom that it was a simple mistake in my case, it is obviously a company tactic to quote the March rate to all customers which is why it is important for ofcom to obtain the statistics mentioned in Appendix 2 g above.

Appendix 4.

The consultation on the general theme of mid term price rises and why ofcom have not taken tougher action.

I am still at a loss to understand why ofcom felt the need for a consultation on mid term price rises when it appears clear that mobile phone contracts were mis sold as regards to the OFT guidelines on unfair contract terms in relation to price increases:

12.4 A degree of flexibility in pricing may be achieved fairly in the following ways:

• Where the level and timing of any price increases are specified (within narrow limits if not precisely) they effectively form part of the agreed price. As such they are acceptable, provided the details are clearly and adequately drawn to the consumer's attention.

• Terms which permit increases linked to a relevant published price index such as the RPI are likely to be acceptable, as paragraph 2 of Schedule 2 to the Regulations indicates, subject to the same proviso.

Evidence to support my assertion that the mobile phone companies have not complied with OFT guidance 12.4 is as follows:
a) Clearly under 12.4 of the OFT guidelines it is not sufficient that a customer has ticked a box to say they have read the T&Cs, the price clause needs to have been “……clearly and adequately drawn to the customers attention.”

1. For example there is no separate tick box to indicate that the customer understands that the price can be increased as per clause X of the T&Cs.

b) It is clear from a review of the advertising used in mobile phone contracts in the past few years that the price per month is always quoted along with the fixed elements of the contract and no mention is made of the fact that prices can be increased.

1. Additionally I have never seen an advert (until recently) for fixed term contracts with the word “initial” next to the monthly price.

c) If a contract is a fixed term contract surely ALL of the T&Cs should be fixed for the term!
d) Within the contract the price term is not prominent (in TMs case for example it is in clause 7.1.4) nor are they in bold, highlighted or larger text than any other clause.
e) The BBC Watchdog programme has broadcast on at least 2 occasions filmed evidence of the sales process of several major mobile phone operators, and it is clear that staff do not comply with 12.4 of the guidance (it is irrelevant if that is a staff training issue or not).

1. I have attached my own evidence of this which is the welcome letter I received from Orange which clearly DOES NOT give any indication that the price can increase, which to be complaint with OFT 12.4 it should do –in deed it actually quotes the monthly price and has the words “24 months” in brackets underneath!
2. The internet is lettered with evidence of sales processes being recorded/filmed where customers have not been informed of the price rise clause.

Given the above evidence on mis selling which can easily be confirmed through a review of the adverts and websites of mobile phone operators over the past few years, together with the independent evidence broadcast by the BBC why does ofcom not believe it is appropriate to follow the precedents for tough action that have already been established in regards to the mis selling of endowment policies and PPI, and compel CPs to refund all sums taken on mid term price rises except in those case where the CP can PROVE that they have complied with OFT guidelines 12.4?

RandomCurve

OFCOMS response - still glossing over the contract T&CS, but as they may take action I decided to ditch that line (for now) and concentrate on Appendix 3 - TM misleading Ofcom.

05 July 2013

Dear XXXXXXXX

We are writing in response to your emails of 1 and 2 July.

Appendices 1 and 2

We note the points you have raised in relation to the application of version 58 and version 59 of T-mobile’s pay monthly contracts. As stated in our response of 28 June, we are considering whether further action by Ofcom may be appropriate in relation to the fairness of the terms, in line with our administrative priorities as set out in our published Enforcement Guidelines. It would not be appropriate for Ofcom to express any further views on the reasonableness or otherwise of the relevant terms and/or how they have been applied whilst we are assessing the case for further action. If we do open a formal investigation, then we will announce this publicly via the Competition and Consumer Enforcement Bulletin[1] on our website.
Appendix 3

We note your correspondence with T-Mobile in relation to its recent price increase. Where relevant, we will consider the evidence you have sent us alongside other evidence available, including from T-Mobile, in our assessment of whether further action should be taken. In relation to your particular case, as mentioned in our response of 28 June, it appears that the advisor at T-Mobile gave you incorrect information when handling your individual complaint. As you have taken your complaint to CISAS, you should draw this to its attention as it can take such factors into account when deciding amounts of compensation.
Appendix 4

We note the concerns you have raised in relation to price variation terms in phone contracts generally and whether they are clearly and adequately drawn to consumers’ attention. We identified similar concerns amongst consumers before T-Mobile’s price increase as we started our review of contract terms in 2012[2] which resulted in a consultation on how to address consumer harm from mid-contract price rises in January 2013[3]. Our consultation identified that consumer harm arises from the lack of transparency of price variation terms at point of sale and in contractual information given to consumers by Communications Providers. The consultation also discussed how Ofcom could address this harm by proposing measures that could improve the transparency of information provided at point of sale. Therefore, your concerns in Appendix 4 are already being considered in the wider context of our consultation. As you know, our consultation closed on 14 March and we hope to issue a decision in due course.

Yours sincerely

Sandra Sutton
Consumer Contact Team

[1] http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/
2 http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01082/
3 http://stakeholders.ofcom.org.uk/consultations/price-rises-fixed-contracts/summary


[1] http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/

[2] http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01082/

[3] http://stakeholders.ofcom.org.uk/consultations/price-rises-fixed-contracts/summary