MSE News: O2 to hike its prices by 2.7% - can you leave your contract penalty-free?

ChilliP2012

Just something that has been pointed out to me regarding the UTCCR:

further down in the schedule - (d)Paragraph 1(l) is without hindrance to price indexation clauses, where lawful, provided that the method by which prices vary is explicitly described.

http://www.legislation.gov.uk/uksi/1999/2083/schedule/2/paragraph/2/made

Another angle to try and approach is the use of premium and local rate numbers all of which are outside the contract bundle. The price increase for these is a little over 14% putting them over their 10% clause. Example, if you've ever made a call that isn’t included in your minutes (0870,0845, etc) or sent a picture message that isn’t covered by your bundle? Then you are getting a 2.7% baserate rise + a further 14.3% rise on those calls and messages. This is above the 10% material detriment rule that O2 use, and therefore you can cancel without penalty. Remind them of this, and don’t take no for an answer. With the baserate rise it needed to be 7.3% or above.

PBC

In the last number of weeks I haven't been able to access the data allowance that I'm paying for. I get the message:

"you are not subscribed to a cellular data service"

I was just on the o2 website doing a live chat with one of their advisors. He said that I did not have an iphone data bolt on, but a general one. He changed it back.

But I pressed him on the issue - told him I'd been using data for some time without any problems. He told me that the bolt on had been changed at my last upgrade.

The thing is, I haven't upgraded. What was he referring to? The price rise!

Anyone else experience this? Seems fairly shambolic to me.

V_For_Verminator

When's the big day Chilli P?

ChilliP2012

V_For_Verminator wrote: »

When's the big day Chilli P?

Don't know yet. They have 28 days from 20th March.

RandomCurve

Guys - the following will help you get a penalty free cancellation!!


What does material detriment mean – Regulatory Context


Under GC 9.6 you have a right to terminate your contract penalty free as follows:


GC9.6:
“The Communications Provider shall:


(a) give its Subscribers adequate notice not shorter than one month of any modifications likely to be of material detriment to that Subscriber;


(b) allow its Subscribers to withdraw from their contract without penalty upon such notice; and


(c) at the same time as giving the notice in condition 9.6(a) above, shall inform the Subscriber of its ability to terminate the contract if the proposed modification is not acceptable to the Subscriber.”


The Mobile phone companies (and Ofcom) are keen to point out there is no guidance within GC9.6 as to what constitutes Material Detriment, BUT I believe that the meaning can be determined by understanding why the Term “likely to be of Material Detriment” was included within GC 9.6 and guidance from the source documentation of GC 9.6.


In the Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013 Ofcom explain the rationale for including the term ““likely to be of Material Detriment” at paragraph 3.6 as follows:


“…..Ofcom and, before us, OFTEL has included a material detriment requirement in the relevant part of GC9. 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.”


So to determine if a change is likely to be of Material Detriment you only need to consider if the change is beneficial or neutral to you. As a price rise is neither neutral or beneficial to you then by Ofcom’s own rationale for including the term "likely to be of Material Detriment” it must be to your material detriment –and under GC 9.6 you are entitled to a penalty free cancellation.


The above interpretation of Material detriment by Ofcom in relation to a change in T&Cs is entirely consistent and therefore reinforced by the USD 20/2 and can also be verified by reference to the Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013 paragraph 3.5:


GC9.6 is included pursuant to section 51(1)(a) of the Act and is intended to give effect to Article 20(2) of the Universal Services Directive (“USD”) (Directive 2002/22/EC, as amended by Directive 2009/136/EC)31 which requires that:


“Member states shall ensure that subscribers have a right to withdraw from their contract without penalty upon notice of modification to the contractual conditions proposed by the undertakings providing electronic communications networks and/or services. Subscribers shall be given adequate notice, not shorter than one month, of any such modification, and shall be informed at the same time of their right to withdraw, without penalty, from their contract if they do not accept the new conditions.”

ChilliP2012

I have sent an email to Ed Richards at OFCOM and I have asked the following:

Dear Mr Richards,

Whilst I welcome OFCOM’s decision to say that fixed contracts should mean fixed, I am really upset that O2 have been allowed to exploit 2 loopholes and raise their prices for millions of their customers.

I would like OFCOM to answer the following questions.

Why have OFCOM allowed this?

Why aren't OFCOM and more importantly the ombudsmen doing anything about this?

Why weren't these loopholes discovered and closed before the announcement from OFCOM that fixed means fixed?

Are OFCOM going to do anything about this going forward?

After complaining to O2 about its price rises and wishing to cancel my contract without penalty they immediately rejected my complaint. This is despite the price rises causing me material detriment and despite never receiving any form of notice from O2 giving me 30 days notice about their price rises. Again, the ombudsmen rejected my complaint and are failing to protect the people they should be protecting, the consumer! I am now having to pursue the matter through a small claims court in order to have my contract cancelled. Not only do I intend to raise the points made above, but I also intend to state that the price rises contravene The Unfair Terms in Consumer Contracts Regulations 1999. However, I would still like some answer to my questions listed above.

O2 should not be allowed to exploit loopholes to bypass OFCOMS rules/conditions and in my view OFCOM should be doing something about this.

I look forward to your reply.

Yours sincerely.

In addition to that the information posted above by RC is very useful indeed. However, it needs clarifying. A lot of people are saying that material detriment is anything that causes you to have a price increase of 10% or more.

-Edit-

For clarity, please read the following:

You can argue the increase is too high if it’s considered unreasonable. For example, an increase of 2.5% to a £40 monthly charge (perhaps due to the Retail Price Index) would mean an increase of £1 per month which is not likely to be seen as unreasonable, while a 10% increase of £4 a month is likely to be unreasonable.

As I stated in post 362 - the use of premium and local rate numbers all of which are outside the contract bundle. The price increase for these is a little over 14% putting them over their 10% clause. Example, if you've ever made a call that isn’t included in your minutes (0870,0845, etc) or sent a picture message that isn’t covered by your bundle? Then you are getting a 2.7% baserate rise + a further 14.3% rise on those calls and messages. This is above the 10% material detriment rule that O2 & other service providers use, and therefore you can cancel without penalty. This can be classed as material detriment.

As it currently stands regarding fixed term contracts, only provider is actually offering fixed term contracts and that is Three.

RandomCurve

The main point is that under the UTCCRs the companies can not claim exclusive right to determine what material Detriment means:




Schedule 2, paragraph 1, states that terms may be unfair if they have the object or effect of:

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract.



13.5 Right to decide the meaning of terms. Similarly, if a supplier reserves the right to decide what a term in a contract means, then he is effectively in a position to alter the way it works so as to suit himself. It is not sufficient to say that the supplier will act 'reasonably'. Such a term gives rise to the same objections as a right to vary terms generally



You can also claim that the term is ambiguous:




UTCCRs Group 19 Regulation 7 states that:

(1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.
(2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail


You have to remember that there are TWO "Material Detriments" in relation to your phone:
1 - The Regulatory Context where the UTCCRs are irrelevant, but Ofcom's definition" is relevant
2 - Contractual context - where the Ofcom regulation GC 9.6 is irrelevant, but you have protection under the UTCCRs


I think that now I have found a potential definition of MD in the Regulatory context this can be used to escape your contract irrespective of what the contract says (but GC 9.6 only covers the "core subscription price".
For "additional services" you need to argue the UTCCRs case and the "10%" case you have laid out

ChilliP2012

I agree material detriment is a very grey & wooly area. To me any rise in cost is material detriment. It's whether a judge at a small claims would see it like that? That's what I am hoping anyway. However, in my case O2 seem to have messed up.

O2 never informed me of any price rise in writing or otherwise. Thus O2 didn't give me 30 days notice. That in itself is against OFCOM's general conditions, UTCCR's and could constitute a breach of contract.

ChilliP2012

I have got a friend helping me, who works in the Executive Office at 3. He's just giving me information about material detriment and in which ways it can be defined. However, whilst I await a reply on that I need to ask every O2 customer that has posted in this thread a wee favour.

When the price rise was announced did O2 contact you? If so, by what method (SMS/Email/Post)? Finally, if you can scan/screenshot a copy of your SMS/Email/Letter (minus personal details) then I would be most grateful

V_For_Verminator

They contacted me by email on the 24th January 2014.