Mobile Phone Contract - Price Rise Refunds

Martinmal1

Just had the following from ofcom
I am writing in response to your recent email to Ofcom regarding:

(i)!!!!!!!!!!!!!the modification to price variation terms in EE contracts entered into before!23 January 2014; and

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(ii)!!!!!!!!!!!!EE’s price increase in 2014.

I will deal with these in turn, but I start by putting into context Ofcom’s powers in these matters.

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Background

Ofcom has two sets of powers that are relevant to price increases and related contract terms. The first is in the General Conditions, which are sector-specific rules Ofcom has made that apply to all providers of telecommunications services. The second is in the Unfair Terms in Consumer Contracts Regulations 1999 (the “UTCCRs”), which are part of UK consumer law that applies to all providers in all sectors. The first is most relevant here.! I provide some information about the second because Ofcom has also considered the application of those regulations at various stages of our work on mid-contract price rises.!

Ofcom exercises these powers on behalf of consumers generally, rather having a role in individual consumer’s disputes. In deciding whether and how to exercise the powers – which cases to devote our limited resources to – we are guided by our administrative priority framework. I explain as follows.

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General Conditions

The relevant General Condition here is General Condition 9.6 (“GC 9.6”).! It says that if any price change is likely to be of material detriment to a customer, providers are required to give customers at least one month’s notice of the change and allow them to withdraw from the contract without penalty. Ofcom’s recently published guidance is about how we intend to apply this rule in relation to contracts for landline, mobile and/or broadband services entered into on or after 23 January this year (the date the guidance came into force).!

The guidance explains that, for these new contracts, Ofcom is likely to regard any increase to the core subscription price agreed at the point of sale as likely to cause material detriment. The core subscription price is the recurring, typically monthly, price the customer is bound to pay for services (e.g. for line rental and airtime).! Where a provider seeks to increase the core subscription price agreed, the provider must allow customers to exit their contract penalty free. (The guidance can be found here:!http://stakeholders.ofcom.org.uk/binaries/consultations/gc9/statement/guidance.pdf).

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The UTCCRs

The UTCCRs apply to terms which providers of goods and services use in standard-form contracts (sometimes called the “small print”).! They say that, subject to exemptions for certain terms relating to the price and the subject matter of the contract, those terms must be fair.! In the words of the relevant regulation, the terms must not, contrary to the requirement of good faith, cause a significant imbalance in the consumer’s and provider’s rights and obligations arising under the contract, to the detriment of the consumer.!

The regulations include an indicative schedule of terms that in certain circumstances may be unfair.! These include some terms that say the provider may vary the price.

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Ofcom’s role

Ofcom’s role is to enforce the above rules on behalf of consumers generally. In particular, where we think a provider has broken the rules in a way that affects a significant number of consumers and we consider that action should be taken to penalise the provider and/or to change its conduct, for the benefit of consumers generally. We only have powers to do that.! We do not have powers to become involved in, nor resolve, individual consumer’s disputes.!

So, where we consider a provider has breached GC9.6, we may take action that results in the imposition of a financial penalty on the provider, and requires it to change its actions and processes to come into compliance with the GC and to remedy the breach. Where we think a provider is using terms that are unfair under the UTCCRs, we can apply to the court for an order to stop the use of those terms, for the benefit of all consumers.! It would be for the court to decide if the term is unfair and whether to make the order.

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Ofcom does not, however, have the resources to pursue every case in which a provider may have breached GC 9.6 and/or used unfair terms. To ensure that we use our resources effectively, we must make decisions about whether or not to open investigations by weighing up the likely benefits of doing so against the resources that would be required.!

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Accordingly, in deciding which cases to pursue – whether and how to use our powers – we apply our administrative priority framework. This takes into account factors such as the degree of harm and the risk to consumers’ interests as a result of the alleged wrongdoing.! Another relevant factor is whether the alleged conduct is, or appears to be, a repeated, intentional or particularly flagrant breach of the relevant rules.

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The overall effect is that we do not pursue all cases that come to our attention. Neither can we, nor do we, take action that will necessarily resolve every individual consumer’s dispute in the way they would like. There are some cases in which our action does not resolve those disputes. There are others where we take a position or action, or decide not to act, and individual consumers do not agree.

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Individual consumer’s complaints

Consumers are able to pursue their own individual complaints with providers, whether or not Ofcom takes action on behalf of consumers generally. Ofcom’s GCs require providers to publish and follow complaints procedures and to belong to Alternative Dispute Resolution (ADR) schemes. Consumers can generally pursue their cases through those procedures and schemes. Although Ofcom has no role in these individual matters, we may be able to provide some general advice about what the rules say and about how consumers may pursue their own complaints.

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Application!!

Against the above general background, I deal below with the specific matters covered in your email.

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EE modification of price variation terms

We are aware that EE has modified the relevant price variation terms for consumers who entered into a contract with EE (including Orange and T-Mobile) before!23 January 2014.! The modification included a more specific reference to the measure (RPI) by which EE sought to reserve the right to increase its prices.

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We acknowledge that there may be scope to take different views.! However, Ofcom has taken the view, based on the information we have, that the change does not appear to us to be one likely to give rise to the right to cancel the contract under GC9.6.! We do not consider it to be a matter we should pursue further as a matter of administrative priority.

The reasons are as follows:

1.!!!!!!!!!!!!The revised terms are likely to put consumers in a better, or at least no worse, position than the previous terms. They do not purport to create a right to increase prices more than was previously the case, and provide more clarity to subscribers as to the published RPI figure that will be used in such increases.

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2.!!!!!!!!!!!!The new term sets out a position that, if or when applied, is unlikely in our view to cause material detriment to relevant consumers.! Consumers to whom the new term applies (who will be consumers who entered into their contracts before 23 January 2014, and in respect of whom, therefore, our recent guidance does not apply) will be able to exit the contract without penalty for price increases that exceed the relevant published RPI figure.

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3.!!!!!!!!!!!!Accordingly, the new term is unlikely to be a change that itself is likely to cause material detriment.! On that basis, it would not require providers to notify and provide subscribers with the right to withdraw from the contract without penalty under GC9.6.

EE price increase in 2014

We are also aware that EE has announced an RPI increase to the subscription price for consumers in contracts entered into before!23 January 2014. Ofcom’s guidance on the application of GC9.6, described above, does not apply to these contracts.! We made clear in the consultation that led to this guidance that our final decision would not be retrospective: it would not apply to contracts entered into before our decision was made. This is in line with general legal principles.!

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In this case, the relevant contracts were entered into before!23 January 2014.! The revised price variation terms came into effect, and the relevant price increase will take effect, after that date. These modify the terms of the existing contracts. They did not, and will not, result in new contracts being made.! As the contracts pre-date 23 January this year, Ofcom’s recent guidance does not apply.! Instead, the position is as follows.!

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In relation to contracts entered into before 23 January, Ofcom’s position generally is that, where the provider’s terms and conditions allow for a core subscription price increase up to RPI, we are unlikely to treat such an increase as materially detrimental. We would not, therefore, generally take the view that customers on such contracts should be given the right to end the contract without penalty under GC 9.6. Neither, generally, would we be likely, taking into account our administrative priorities, to take action if the provider did not allow customers to end their contracts.!

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In this case, EE has applied contract terms that, in effect, provide for an annual core subscription price increase of up to RPI. It appears to have applied the RPI figure provided for by the relevant terms.! Again, we agree there may be scope for different views.! However, Ofcom’s view, in with the above, is that such a price increase is unlikely to give rise to material detriment and to rights to terminate contracts under GC9.6, and that this is not a matter in which we should take action on behalf of consumers generally as a matter of administrative priority.!

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Nevertheless, individual customers affected by these sorts of price increases might consider that the increase is to their material detriment.! If they do, those customers can request to their provider (here, EE) that they be allowed to exit the contract without penalty. If the provider does not agree, the customer could pursue the matter under the provider’s complaints procedure. If the complaint is not resolved after 8 weeks, or a deadlock is reached earlier, the customer may refer the complaint to the relevant ADR scheme.

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Please note a copy of your complaint has been recorded here at Ofcom.

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Yours sincerely

!

Jessica!Eyles

Consumer Contact Team

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delboy9

Hi all, just a quick update as to where I'm at.

After starting the process on the 10th April and not having any contact, I have now had 2 quick replies. The first standard reply by post yesterday and now a further email after I sent off the 2nd template yesterday.

It reads:


Case Reference: xxxxxxx
Account Number: xxxxxxxxx


Dear Mr xxxxxxxxx

Thank you for your letter, received in the Executive Office, I have been asked to respond on behalf of EE.

I am sorry you are unhappy with the recent Price Increase. As a company we are committed to offering the best value for service which is why we have kept the increase to a minimum. The increase is a result of the rising costs to our business and is in line with the Retail Price Index (RPI), which is a measure of inflation.

EE do not feel that this change is of material detriment to you as it is in line with the Retail Price Index (RPI), which is a measure of inflation. I acknowledge you do not agree with this decision therefore the next step would be to seek independent adjudication via CISAS.

You may refer your complaint to CISAS. CISAS will determine whether the complaint falls within the jurisdiction of its ADR Scheme. We may argue that it does not. If CISAS agrees its Scheme applies, it will adjudicate on the complaint in line with the Scheme rules. CISAS's details are as follows:-

CISAS
International Dispute Resolution Centre
70 Fleet Street,
London,
EC4Y 1EU

Email: [EMAIL="info@cisas.org.uk"]info@cisas.org.uk[/EMAIL]
Tel: 020 7520 3827
Fax: 020 7520 3829

I trust the above information is of assistance to you.

Yours sincerely



Donna Wigglesworth
Executive Office, EE
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EE Limited
Registered in England and Wales
Company Registered Number: 02382161
Registered Office Address: Trident Place, Mosquito Way, Hatfield, Hertfordshire, AL10 9BW


Obviously I now need to make a complaint to CISAS but could I please have some help on what to do next?....

Thanks

RedHeadPeter

Mikmonken wrote: »

That's exactly what it is - an argument for a penalty free cancellation, potentially this could be the starting point for EE et al. regular increases in fixed price contracts mid contract.

If you're adamant you want to stay with EE (or iteration) have you tried calling them up and asking them to cancel your price rise?

Unless you're getting a fantastic deal you may want to pursue a penalty free cancellation and take out a sim only deal therefore saving mobile phone markups? if so start at post #99 and then move on from there depending on the response you get back. likely post #175

Mikmonken. OK, I understand now, so I have used the first template and referred to both the price rise letter and their letter in response to me as grounds for the penalty free cancellation. Another one for them to deal with.

ulaggy

I've had the same email, twice, as the poster in post 252 - Ofcom basically saying "We're not interested."

I think the reason I received it twice, with different reference numbers is because I CC'd the Ofcom lady into my email yesterday (the Post 175 email)

The emails I received from Ofcom today were identical to the one posted on this thread. Copy and paste job I imagine!

RandomCurve

ulaggy wrote: »

I've had the same email, twice, as the poster in post 252 - Ofcom basically saying "We're not interested."

I think the reason I received it twice, with different reference numbers is because I CC'd the Ofcom lady into my email yesterday (the Post 175 email)

The emails I received from Ofcom today were identical to the one posted on this thread. Copy and paste job I imagine!

Okay this is great news on 2 accounts:

1. By copying Ofcom in EE have finally done the RIGHT thing and have referred you to CISAS - so the lesson for everyone is copy in Ofcom ([EMAIL="Lynn.Parker@Ofcom.org.uk)"]Lynn.Parker@Ofcom.org.uk) [/EMAIL]on EVERY COMMUNICATION WITH EE!
2. We can put a case together for CISAS (It will basically be a combination of the first and second emails). I'll draft something up in time for Monday if I can.

The bad news is that EE have realised (from the tone of the emails and the recent T&C change fiasco) that if they do not act according to the rules they will have to pay compensation, so they are cutting down your chances of getting compensation - but hey we will still try as that is just a bonus, the real goal is the penalty free cancellation.

RandomCurve

traylerc wrote: »

Hi, well big thanks first off for all this great Legal Help so far!.

I have one question though; where is it possible to see the official RPI rates online? I have been searching about and had very little luck, I would love to see the exact RPI %.

Welcome to the forum, but remember - no legal help here - just some sharing of experience.;)


RPI/CPI can be found on the link below:
http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/february-2014/index.html

RandomCurve

Martinmal1 wrote: »

Just had the couple of generic letter through the post for both of the accounts so now onto E-mail number 2.

Was also thinking of adding that with 1 of the contracts being taken out on the 15th January this year that when the price rise kicks in that the increase will be over 7% materially to me as it's only 135 days since the contract was taken out so 365/135*2.7=7.12%, and adding that this is the increase i will feel on the 28th May, yes it will reduce over the course of the year but at that date that is the increase applied.

Not sure if im talking utter rubbish above but may throw it into the mix and see how it comes out.

Cheers for the follow up Email random Curve

You actually raise an interesting point. I have always thought that it can't be correct to apply a 12 month inflation rate to a contract that is less than 12 months old, but I have never pursued this. Also last year T-Mobile "phased" in the increase so rather than being applied in May (it was applied,but credited back) it began on the month you signed your contract (this was cynical ploy to try and avoid any Ofcom rule changes on mid term price hikes), BUT it could be an interesting challenge as to why they have not phased it in this time around.


And as I have been responding here it actually makes sense that they CAN ONLY apply the rise starting 1 year after the last price rise/contract start date as for anybody who is having a SECOND price rise applied will have seen their bills go up twice in less than12 months (If I had not escaped my contract last year the increase would have been applied from Nov 2013 and now I would be paying another increase from May 2014) - can't be right!!!

ulaggy

RandomCurve wrote: »

Okay this is great news on 2 accounts:

1. By copying Ofcom in EE have finally done the RIGHT thing and have referred you to CISAS - so the lesson for everyone is copy in Ofcom ([EMAIL="Lynn.Parker@Ofcom.org.uk)"]Lynn.Parker@Ofcom.org.uk) [/EMAIL]on EVERY COMMUNICATION WITH EE!
2. We can put a case together for CISAS (It will basically be a combination of the first and second emails). I'll draft something up in time for Monday if I can.

The bad news is that EE have realised (from the tone of the emails and the recent T&C change fiasco) that if they do not act according to the rules they will have to pay compensation, so they are cutting down your chances of getting compensation - but hey we will still try as that is just a bonus, the real goal is the penalty free cancellation.

I'm a little confused, unless I'm just misreading. It was me that CC'd Ofcom in, not EE. Unless you're referring to the email received by Delboy9 which specifically mentions CISAS?

I've had the same email from Ofcom, not from EE (my EE email or letter didn't mention CISAS). Still, if one person is getting told to go to CISAS, then that's a good start!

RandomCurve

RedHeadPeter wrote: »

RandomCurve, I picked up on your posts on the Which forum and jumped across to here. I had already written my own letter to T-Mobile and this morning received the standard response - except it quotes an Orange Account Number and has no name on it (or signature) and no case reference. Actually maybe it does, there is an http address printed across the bottom which includes a Caseid (it's all pretty shoddy)

Even so I guess I am now ready for the next stage, but I confess to being very confused as to which is the next stage (13 pages of forum). It isn't post 175 I think? Though it would be lovely to dump them altogether, though maybe unreasonable after only 9 months! So can you point me to the template for the next stage (maybe to all the stages for others benefit). Thanks - and well done!

That Which forum was soooo frustrating, loads of people moaning, and nobody doing anything!


Glad you decided to come and join our party even if Which say
"To everyone else – we cannot confirm the efficacy of RandomCurve’s suggestion, though complaining to EE could certainly help"


I note that Patricks comment (Boxed in red) has more dislikes than likes - if anybody wants to add some dislikes on Which then please do (and add some likes to my "challenge to Which - which is the fourth blue box below the red box) -it may make them accept the challenge!!!)


http://conversation.which.co.uk/technology/ee-orange-t-mobile-price-rise-ofcom/

Martinmal1

RandomCurve wrote: »

You actually raise an interesting point. I have always thought that it can't be correct to apply a 12 month inflation rate to a contract that is less than 12 months old, but I have never pursued this. Also last year T-Mobile "phased" in the increase so rather than being applied in May (it was applied,but credited back) it began on the month you signed your contract (this was cynical ploy to try and avoid any Ofcom rule changes on mid term price hikes), BUT it could be an interesting challenge as to why they have not phased it in this time around.


And as I have been responding here it actually makes sense that they CAN ONLY apply the rise starting 1 year after the last price rise/contract start date as for anybody who is having a SECOND price rise applied will have seen their bills go up twice in less than12 months (If I had not escaped my contract last year the increase would have been applied from Nov 2013 and now I would be paying another increase from May 2014) - can't be right!!!

The idea was just sitting in my head and i have added it onto the 2nd email and will see if it garners a response, will at least give them something to think about it although will no doubt receive the generic clap trap they seem intent on sending to everyone.