Mobile Phone Contract - Price Rise Refunds

RandomCurve

A reminder – I am NOT legally trained. Everything I have put here is just from my experience. You use these templates at your own risk*, you are free to use any othetr template/words you feel would be better.
* =There is no financial penalties to you if you lose the case. So effectively the risk is zero J

How to use this CISAS case:
Update the RED text to suit your circumstances
All ORANGE text should be deleted – it is just there to “guide” you
The two BLUE sections should be REMOVED – unless they apply to your contract
The two GREEN sections should be REMOVED – unless they apply to your contract
The first part marked summary should be copied and pasted into the CISAS application.
Appendix 2 – X are the emaiusl you have exchanged with EE and should be



Summary

My claim is not in regards to EE/Orange/T-Mobiles’ (referred to as EE throughout the remainder of this claim) business decision to increase prices, as a business EE is free to make whatever business decisions it chooses. My claim is that the price rise notified to me is of material detriment as per the Ofcom definition of Material Detriment under GC 9.6, and therefore under GC 9.6 I am entitled to a penalty free cancellation.

Without Prejudice (only use this if the your payment has increased above 2.7% e.g. Original payment £25.00 plus 2.7% (£25.00*2.7/100= £0.675p) so maximum new price = £20.67p)
The price rise applied to my account means that the actual net monthly core subscription price that I am paying to EE reflects an increase higher than the February RPI rate 2.7% allowed under the contract, and as per our contract I am entitled to a penalty free cancellation

Without Prejudice (Only use this argument if you are a T-Mobile customer and took out your contract BEFORE 30th October 2012 OR if you had a 3.3% price rise applied last year and never had that reduced to 3.2% in October/November 2013 – you would have received a text advising you of a 0.1% reduction).
As EE applied an annual inflation rate to my account in 2013 referencing the March 2013 RPI rate (published in April) then by applying an annual inflation rate in 2014 that references the February 2014 RPI rate EE have applied a 12 month inflation rate to an 11 month period. This is in breach of our contract as it is implied that price rises (by virtue of the contract allowing reference to the annual RPI) can only be applied annually, if this were not the case then EE could apply the annual RPI to my account every month if they so choose, and this could not never have been the intent of EE when drafting the contract.


Adjust the figures below and remove the points that do NOT apply to you – some will have all threee others just 2 and some only the first point –also if you monhly plan is higher than £25 you may want to use that rice plan for each of the items below.
Further I request that I be awarded £75 compensation (£25 for each) of the following:

[*]EEs breach of GC 9.6 – not informed of my rights to cancel the contract penalty free should I consider the increase to be of Material Detriment, (£25)
[*]EEs initial lack of response to my email of DATE – taking X days and X follow-up emails until a response was received (£25)

• EE falling to address the points raised in my original email even though I had made it clear that a response that did not address each point would not be an acceptable response (£25).

Details are at appendix 1
Correspondence is at Appendix 2 to X

RandomCurve

Will be in 2 posts


Appendix 1

Forward
I submit that this case should fall within the remit of CISAS as the issue relates to whether I am entitled to terminate the agreement without penalty which flows from the interpretation of the contract and Ofcom regulations, and concerns the price being charged for the provision of mobile telecommunications services. For the avoidance of doubt my claim is not in regards to EEs business decision to increase prices, as a business EE is free to make whatever business decisions it chooses.

There are no complex issues of law that would be outside of the competence of an adjudicator or that are outside the scope of the CISAS Scheme. Indeed as the contract is a standard form Business to Consumer contract drafted solely be EE then EE have a duty of care to me to ensure the contract is clear and unambiguous and as uncomplicated as possible. Should EE plead that this is a complex matter then I request that the adjudicator considers if this would warrant an additional compensation payment as EE would either:

• Not be acting in Good Faith by claiming that the matter is complex – when it is not OR
• If it considered too complex then EE have not applied the required duty of care when drafting the contract and its revisions.
  

The matters that need to be considered are:

• Does a REAL TERMS increase in the core subscription price fall within the Ofcom (and OFTEL before them) definition of Material Detriment (which is Detriment) as per GC 9.6?
• Is a NEW contract term that EE have added to the contract to replace an existing term solely at EEs discretion AFTER the new Ofcom regulations came into force subject to the new regulations?
• Does a “change” in regulation that is no more than a clarification of a previously poorly defined term apply to that existing term as the term itself has not changed ?
• If the Net core subscription has increased (the amount actually being taken from my bank account) by more than the inflation rate referenced in the contract does that trigger my right to a penalty free cancellation as the contract states if the increase is above RPI I can cancel penalty free (without reference to Material Determent)?
• Dose the application of a 12 month inflation rate to an 11 month period in a contract that implies annual price rise amount to a breach of contract and/or a price increase that is above the correct relevant RPI rate?
  

Details
My claim is that by applying a 2.7% increase to my contract – referencing the February 2014 Annual RPI rate, EE have applied an increase that triggers my right to a penalty free cancellation. By not allowing a penalty free cancellation EE have not complied with the terms within/regulations governing our contract.
1. Without Prejudice.
Under Ofcom regulations I am entitled to a penalty free termination if EE impose a price rise that is “likely to be of Material detriment”. Ofcom GC 9.6 takes precedence over any term placed in the contract by EE. In the regulatory context Ofcom have clearly articulated what is meant by Material Detriment when explaining why the term was introduced into GC 9.6 by OFTEL and retained by Ofcom (from Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013”)
"Our intention was to reflect our general duties and principles of good administration and proportionality in particular. We sought, in light of these, not to rule out contract variations altogether. For example, those beneficial to, or having a neutral impact on, a subscriber.”


It is clear from the above that under GC 9.6 ANY change that is neither to my benefit or neutral is of Material Detriment. In other words Material Detriment in the regulatory context simply means DETRIMENT.

This interpretation by Ofcom (although slightly more restrictive) clearly reflects the intentions of the Universal Service Directive (USD) USD 20/(22) for which Ofcom have a legal duty to incorporate into UK law and they have done so via GC 9.6. It is clear that the intention of USD 20/(22) was to give the CONSUMER the choice to cancel their contract during a fixed period for ANY modification that is made which they do not accept as follows:

USD 2002/22/EC
Chapter IV – End User Agreements
Article 20 – Contracts
Paragraph 4

4. Subscribers shall have a right to withdraw from their contracts without penalty upon notice of proposed modifications in the contractual conditions. Subscribers shall be given adequate notice, not shorter than one month, ahead of any such modifications and shall be informed at the same time of their right to withdraw, without penalty, from such contracts, if they do not accept the new conditions.

By relating the regulatory definition of Material detriment (Detriment) to an RPI increase it is clear that ANY increase in price is not to my benefit, and therefore the only matter to be considered is if an increase of RPI is neutral to me or is to my detriment (Detriment being the Ofcom definition of Material detriment in the context of GC 9.6 “[not being] beneficial to, or having a neutral impact on, a subscriber). If RPI is a REAL TERMS increase then it cannot be considered to be Neutral and has to be to my detriment, and therefore under Ofcoms GC 9.6 definition also of “Material Detriment”, thereby triggering my right to a penalty free cancellation.

In February 2013 (14 Months before EE updated its T&Cs to allow an RPI increase) the Office of National Statistics (ONS) issued a statement clearly explaining that RPI was to be declassified as a National statistic from March 2013 (12 months before EE updated its T&Cs), as its calculation methodologies were flawed and it did not comply with internationally recognised statistical methodologies.

“While ONS will continue to publish the RPI every month, its designation as a National Statistic has been cancelled. Please see background note 1 for more details”(ONS web site February 2013 follow link below)http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/february-2013/stb---consumer-price-indices---february-2013.html

“Following a consultation on options for improving the Retail Prices Index (RPI), the National Statistician, Jil Matheson, has concluded that the formula used to produce the RPI does not meet international standards and recommended that a new index be published.”
The National Statistician’s consultation was prompted by the need to address the gap between the estimates produced by the RPI and the Consumer Prices Index (CPI). The ONS research programme found that use of the arithmetic formulation (known as the ‘Carli’ index formula) in the RPI is the primary source of the formula effect difference between the RPI and the CPI, and that this formulation does not meet current international standards. Therefore, a new RPI-based index will be published from March 2013 using a geometric formulation (Jevons), known as RPIJ”. http://www.ons.gov.uk/ons/rel/mro/news-release/rpirecommendations/rpinewsrelease.html
Further RPI only continues to be published for long-term indexation, and index-linked gilts.

In developing her recommendations the National Statistician also noted that there is significant value to users in maintaining the continuity of the existing RPI’s long time series without major change, so that it may continue to be used for long-term indexation and for index-linked gilts and bonds in accordance with user expectations. http://www.ons.gov.uk/ons/rel/mro/news-release/rpirecommendations/rpinewsrelease.html

The ONS has replaced RPI with RPIJ in order that UK inflation can be correctly compared with other countries. However another measure of inflation – CPI – also exists which is the internal UK measure of inflation and is the measure of inflation used by the Government to set inflation targets for the Bank England to consider when regulating the economy.
The relevance of the above is that if RPI is higher than RPIJ or CPI then any increase applied to my account using an index that is correctly only to be used when indexing gilts or looking at long-term indexation (not short term annual indexation) will be a REAL TERMS increase in the cost of my core subscription price.
For February 2014 the relevant annual indexes were:

• RPI – 2.7%
• RPIJ 2.0% (RPI is 35 % higher) and
• CPI 1.7% (RPI is 58.8% higher)

It is clear from the above analysis that RPI is higher than the internationally recognised, and UK internal true measures of inflation, and is therefore a REAL TERMS increase. A REAL TERMS increase cannot be Neutral to me and so has to be to my detriment (Detriment being the Ofcom definition of Material detriment in the context of GC 9.6 “[not being] beneficial to, or having a neutral impact on, a subscriber) therefore under the Ofcom (and OFTEL before them) definition of Material Detriment, which is – DETRIMENT the change in price applied by EE is to my Material Detriment I should be entitled to a penalty free cancellation under GC 9.6

EE had the opportunity (when applying a new term to my contract effective 26 March 2014) to incorporate RPIJ or CPI into the contract rather than RPI, as the ONS had widely published the change to National Statistics 14 months previously. However just because EE have referenced RPI in their contract they are not obliged to apply RPI and can apply any rate LOWER than RPI eg RPIJ or CPI. EE have chosen to apply the full rate of RPI, which is an index that is not classified as a National statistic and gives a higher increase (and therefore a REAL TERMS increase) than the true measures of UK inflation. This act by EE clearly demonstrate that EE considers the difference between RPI and RPIJ or CPI to be material, otherwise EE would not have applied a REAL TERMS increase to it’s revenue streams (the price I pay for my contract is REVENUE to EE not a COST) and would have used a recognised National inflation index. Obviously a REAL TERMS increase cannot be Neutral to me and so has to be to my Material detriment (Detriment being the Ofcom definition of Material detriment in the context of GC 9.6 “[not being] beneficial to, or having a neutral impact on, a subscriber). and I should be entitled to a penalty free cancellation under GC 9.6.

2. Without Prejudice
In the Ofcom publication “Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013. Ofcom defined “Likely to be of Material Detriment” in relation to price variations as follows:

Paragraph 6.22
“In particular, we consider guidance is needed as to price rises which we are likely to regard as materially detrimental (or likely to be materially detrimental) and invoking the requirements of GC9.6. Such price rises are likely to include any increase to core subscription prices.”

The above definition is to apply to contracts agreed to on or AFTER 23rd January 2014. However as EE inserted NEW price variation clause effective 26th March 2014 (2 months after the date to which the definition applied) then the NEW price variation clause was effectively implemented after the Ofcom definition of Material Detriment in relation to Price variation clauses came into effect, and is therefore subject to the new definition.
As the EE price variation clause is subject to the revised GC 9.6 definition of Material detriment in relation to price variation I am entitled to a penalty free cancellation.


3. Without Prejudice
In the Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013. Ofcom defined “Likely to be of Material Detriment as follows:

Paragraph 6.22
“In particular, we consider guidance is needed as to price rises which we are likely to regard as materially detrimental (or likely to be materially detrimental) and invoking the requirements of GC9.6. Such price rises are likely to include any increase to core subscription prices.”

Whilst Ofcom have announced that this will only apply to contracts entered into on or after 23rd January all Ofcom have actually done is clarify a definition. They have not changed the words of GC 9.6. As they have only clarified a definition then the definition must apply to all contracts as the definition is the definition, therefore all changes in core subscription price regardless of when the contract was entered into must give rise under GC 9.6 to a penalty free cancellation (how can a 2.7% increase in a contract signed before 23rd Jan not be considered as Material Detriment, whilst EXACTLY THE SAME INCREASE applied to a post 23rd January contract be of Material Detriment)?
The previous definition of Material detriment was articulated by Ofcom in terms of what was not of Material Detriment “..those /U][/B][I][U][B]changes[/B][/U][/I][B][Ubeneficial to, or having a neutral impact on, a subscriber.” Ofcom have now confirmed that this is the case by stating the definition in the Positive form of what is Material Detriment “….price rises which we are likely to regard as materially detrimental (or likely to be materially detrimental) and invoking the requirements of GC9.6. Such price rises are likely to include any increase to core subscription prices.”
So essentially the definition has remained unchanged – it has merely been more clearly articulated.

RandomCurve

Post 2


4. Without Prejudice (T-Mobile Contract taken out pre 30th October 2012 only)
The price rise applied to my v58 T-Mobile contract is of Material Detriment to me under GC 9.6. In March 2013 T-Mobile were most forceful (see legal representation from EE legal office 3rd July 2013)* in insisting that the Annual RPI applied to my account of 3.3% related to the March 2013 RPI published in April 2013, whereas now EE are applying the February 2014 ANNUAL RPI rate to the same contract. Effectively EE are applying a 12 month inflation rate to an 11 month period, or put another way, EE are increasing my contract price more regularly than once a year. As the contract refers to the right to increase prices by the ANNUAL inflation rate, it is implied that the rate applied must reference a 12 month (ANNUAL) period between the RPI rates applied. To apply an ANNUAL RPI increase to my account EE would have to reference the March 2014 RPI figure which was 2.5% and not 2.7%. Therefore EE have applied a rate in excess of that allowed under the contract. It follows that as EE have applied a rate in excess of the correct annual RPI (regardless of materiality) then I should be entitled to a penalty free cancellation as per the terms of our contract.

*T-Mobile Defence to a CISAS case regarding the Annual RPI rate applied to my contract:

COMMUNICATIONS & INTERNET SERVICES ADJUDICATION SCHEME

REFERENCE: 212132298
BETWEEN
MR XXXXXXXX Claimant
and
EVERYTHING EVERYWHERE LIMITED
trading as T-Mobile Respondent
…………

19 As the Written Notice was issued in the month of April 2013 then the relevant month’s RPI figure for the purposes of Clause 7.2.3.3 of the Agreement is the RPI figure as published by the Office of National Statistics (“ONS”) representing March 2013; being the month before the month in which the Written Notice was issued. The March RPI figure, published by the ONS Statistics was 3.3%. By way of the Monthly Statistical Bulletin (“the Bulletin”) published by the ONS the following is stated:-

The RPI 12-month rate for March [2013] stood at 3.3%

The Bulletin is a lengthy document so has not annexed to this Defence but can be made available to CISAS upon request. …………

The Respondent believes that the facts stated in this form are true. I am duly authorised by the Respondent to sign this statement.

Dated the 03 July 2013

Rue Kandi
Legal Executive
For and on behalf of the Respondent whose address for service is at:
Everything Everywhere Limited
Hatfield Business Park
Hatfield
Hertfordshire
AL10 9BW.

5. Without prejudice (Only to be used if the calculation shows a figure higher than 2.7% - even if it is 2.70001%)
The methodology used by EE to calculate the increase applied to my account results in the actual payment leaving my bank account each month relating to the core subscription price being in excess of the February RPI rate. In accordance with the contract if an increase is applied in excess of RPI then I am entitled to a penalty free cancellation (regardless of Material Detriment).
The figures are as follows Pervious monthly cost £XX.XXp. revised monthly cost £XX.XXp which is an increase of £X.XXp whereas a 2.7% increase would have resulted in a new monthly cost of £X.xxP, therefore under the terms of our contract as the net increase is in excess of RPI I am entitled to a penalty free cancelation

The quantum above RPI is irrelevant. Even if the increase was just 1p above 2.7% then EE must have applied a rate HIGHER than the published RPI rate which triggers my right to a penalty free cancellation as per the contract.

Mikmonken

Am I right in thinking for those of us who have not yet seen the effect of the price rise in the bill to hold off until that comes in.

That way we may have an extra element that we could include in the CISAS case?

Mikmonken

RandomCurve your advise and guidance during this has been invaluable, thanks.

smac02

onecoolpenguin wrote: »

Hi i received this email,
'Thank you for your email dated 8 April 2014, received in the Executive Office, I have been asked to respond on behalf of EE.

I am sorry you are unhappy with the recent increase to our prices and some of our services. As a company we are committed to investing significantly in our network and work hard to give the best value for our service, we have in this instance tried to keep these increases to a minimum. However due to rising business costs linked to inflation we have had to revaluate our pricing structure.

In this instance, the increase to price plans is in line with RPI at 2.7% and compliant with the Terms and Conditions of your contract. Our Terms and Conditions give us the right to increase the cost of our services and this change does not give you a right to terminate your contract. Please refer to clause 3.7 in your Terms and Conditions.

Whilst I understand this is not the outcome you were looking for, I trust I have clarified EE's position regarding this matter.'

and want to send the #175 reply but am a bit confused about the clause 3.7 (highlighted in red) stated in the email as i am an orange customer so not sure whether should quote 15.1 in my reply or 3.7? Sorry if this a stupid question and thank you so much for your help random curve!


suspension of orange additional services
3.7: we reserve the right to change, suspend, increase the price of or withdraw part or all of any orange additional service on giving reasonable notice

Ive had the same reply so have just emailed a reply expressing my dissatisfaction that they have not considered all the points I raised. Hope this will now move it on to the next stage

ulaggy

Quick question - As far as the "Who are you complaining about" question, should I put T-Mobile (Everything Everywhere Ltd) rather than plain T-Mobile?

Also, the bit it says about "When your complaint had not been dealt with to your satisfaction after eight weeks, did the company write to you to tell you that you could apply to the CISAS scheme? *"

Do we put yes and then send them a copy of the email received?

ulaggy

Mikmonken wrote: »

Am I right in thinking for those of us who have not yet seen the effect of the price rise in the bill to hold off until that comes in.

That way we may have an extra element that we could include in the CISAS case?

I'd say no - I haven't. All I did is use EE's calculator to work out what my bill is due to increase to.

http://terms.ee.co.uk/calculator.html#

In my case, it's due to be 1p less than the max amount allowed by the RPI.

muse213

Have put the summary in the summary box, where do we put the details and appendix's?

ulaggy

muse213 wrote: »

Have put the summary in the summary box, where do we put the details and appendix's?

The appendix bits will go in a separate email, assuming you clicked on that option at the start, I believe!