EE/Orange/T-Mobile - Reclaim ALL price rises AND cancel contract re T&C change

RandomCurve

Send to:
Graham.Howell@Ofcom.org.uk

Dear Mr Howell

Official Complaint Re Ofcom’s lack of action over EEs change in T&Cs and Ofcom’s obvious side-stepping of legitimate consumer questions.

Following recent communications with Ofcom and Lynn Parker in connection with the EE (all brands) change in Terms and Conditions effective from 26th March 2014, please accept this letter as the next step in the formal escalation process.

Before beginning the substance of the complaint I would like to point out that from a consumer perspective asking one senior Ofcom employee to review another senior colleagues’ response does not come across as an unbiased way of reviewing what has happened. I strongly suspect that that you will do little more than to agree with your colleagues’ opinion. However as this is the next stage in a larger complaints process I have taken the time to prepare the below.

In essence there two complaints (originally only one, but due to Ofcom’s (lack of) response it is unfortunately now two.

I will only outline the issues here as all of the details can be ascertained by reading the correspondence that has already taken place.

Complaint 1
Ofcom did not take action when EE gave notice that they were changing their T&Cs effective 26th March 2014. The change is in connection with the price variation clause (the very clause that Ofcom has tried to address in its change of definition of Material detriment).
The change means that EE now purports to have the right to increase the contract price by RPI inflation on an annual basis without triggering my right to a penalty free cancellation, whereas the old clause capped EE price rises to the maximum of the LOWEST inflation figure (CPI which according to the Office of National Statistics (ONS) due to the calculation methodologies used RPI will always be higher than CPI).
So EE have updated their price rise clause in a manner which allows them to increase prices by an amount greater than was previously the case (58.8% higher using the March inflation figures which a subsequent price rise was based on) during the “fixed” period of the contract.
I would like Ofcom to explain the reasons why no action is being taking, being mindful that my complaint is that Ofcom should have taken action because of the change that was being made, and has nothing to do with if the new clause is fair or causes Material Detriment.

Complaint 2
Despite Ofcom insisting that they have addressed all previous questions, I (the person actually asking the questions) believe a number of points remain unanswered. Please see the attached emails FMI-4 and FMI-5 where I think it is clear enough where I believe Ofcom have either answered different questions to those actually being asked, or have ignored the question altogether.
I am also still unclear if Ofcom are not taking action because their interpretation is that EE have not breached GC 9.6, the UTTCRs, or indeed the Unfair Trading Regulations – Material distortion* regarding the wording of the change notification which made on mention that a higher price rise could now be applied, but rather suggests that the change was to do with the way that the notification will be made
“We're making some changes to the terms and conditions for your 4GEE plan to give you more clarity on the notification of price changes. For more details and to download a copy please see http://www.ee.co.uk/termsrefreshv1 The new terms will take effect from 26 March 2014.
Or if Ofcom are not taking action due to their “administrative priorities”.

Should you believe that Ofcom have already adequately responded to each question (the actually question asked) then could you be so kind as to “cut and paste” the answers under each of the questions in FMI-4 and FMI-5.

Regards

Supporter of “Fight Mobile Increases” – a pressure group dedicated to assisting consumers use the protection of the UTCCRs and GC 9.6, and to monitor and highlight Ofcoms actions (inaction) in relation to the Mobile Phone Market.

*Unfair Trading Regulations
Test 2: Material distortion
10.8 Material distortion is defined (in Regulation 2) as:
‘appreciably to impair the average consumer’s ability to make an informed decision thereby causing him to take a transactional decision that he would not have taken otherwise’. It applies either when a practice distorts or is likely to distort the average consumer’s behaviour.
The second condition is likely to be met if, for example, because of the practice, the average consumer would buy a product they would not otherwise have bought, or would not exercise cancellation rights when otherwise they would have done so.

ulaggy

Email sent!

RandomCurve

MSE still have our campaign on their "to look at " list. Apparently it is a long list so it may be some time before I know if they will give us some publicity/run a story/ask questions of Ofcom for us.


In the meantime we fight on - if we win some cases it may help to reprioritise them

jocklatic

ulaggy wrote: »

Email sent!

Trying to send email but unable to attach fmi 4 &fmi 5???
Any idea how to??

ulaggy

jocklatic wrote: »

Trying to send email but unable to attach fmi 4 &fmi 5???
Any idea how to??

The files are on the website. 2x docx files. I just attached them in gmail as I'd attach any other file!

jocklatic

ulaggy wrote: »

The files are on the website. 2x docx files. I just attached them in gmail as I'd attach any other file!

Seen them in the fightmobiles bit, but are in word format & i'm unable to copy/paste. Is it worth just sending in RC's letter to G.Howells & miss out the attachments??

RandomCurve

jocklatic wrote: »

Seen them in the fightmobiles bit, but are in word format & i'm unable to copy/paste. Is it worth just sending in RC's letter to G.Howells & miss out the attachments??

FMI-5




Dear Lynn,





Thank you for responding to my email of 30th June 2014 – I appreciate the time you have taken to consider the contents, I am therefore surprised by the number of issues raised in my email that you have failed to address. As I would rather that any complaint that I forward to Graham Howell concentrated on my belief that Ofcom has mis-assessed the situation and has therefore not acted correctly in this matter rather than a compliant about Ofcom avoiding valid questions asked by a concerned consumer I wanted to give you another chance to respond to the issues.


As you have pointed Ofcom have already spent some considerable time looking into the basis of the points made and so I have a list of question that simply require a Yes/No answer. Given the deep consideration already given I suspect that you should be able to respond to this email by return as the answers to the questions raised below would have all contributed to you reaching the conclusions that you have.





In an email dated 23rd April from yourself (Lynn Parker) on behalf of Ofcom you state:


“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”

• Does Ofcom still hold the view that the new EE T&Cs “….do not purport to create a right to increase prices more than was previously the case”?
  Yes or No?
  
  The UTCCRS Group 10 clauses regarding contract variations (Schedule 2, paragraph 1 (j)) state:
  “10.2 If a term could be used to force the consumer to accept increased costs or penalties, new requirements, or reduced benefits, it is likely to be considered unfair whether or not it is meant to be used in that way……”
• As a designated enforcer of the UTCCRs are Ofcom satisfied that EEs change in T&Cs has not breached Schedule 2 Paragraph 1 (j)?
  Yes or No?
  
  Again in your email of 23rd April it was stated (as above):
  “ …and provide more clarity to subscribers as to the published RPI figure that will be used in such increases”
• Ofcom (with its consumer protection remit in mind) considers that giving customers less scope to exit their contracts when a higher increase than was previously allowed is applied is a benefit to the consumer (the term does NOT clarify which RPI rate will be used, it replaces CPI with RPI) – especially when precisely because of the uncertainty of the inflation rate the old clause was probably unenforceable under OFT group 12.4 rules..
  Yes or No?
  
• It is Ofcom’s view that EEs new contracts effective from 26th March 2014 (as EE issued new contracts – this was not a modification to an existing contract), are not subject to the clarified meaning of Material Detriment?
  Yes or No?
  
  Regarding the use of RPI rather than CPI.
• Ofcom are aware that RPI is NOT a designated National Statistic
  Yes or No?
  
• Ofcom are aware that the ONS have categorically stated that due to the calculation metrologies used RPI will ALWAYS OVERSTATE the true inflationary pressures in the economy.
  Yes or No?
  
• As a regulator with responsibility for promoting competition in the market Ofcom are content that some CPs (EE/O2) are running their business in such an inefficient manner that they are experiencing cost increases over and above the general level of inflation experienced in the economy?
  Yes or No?
  
  The EE contract price includes:

• Call Termination charges (which have decreased significantly),
• The Network licence (which was paid for several years ago)
• The Handset cost (which was fully incurred by EE before I took out my contract); and
• An element of profit

• Given the above Ofcom believes that RPI applied to the entire cost of my contract is a fair reflection of the cost increases incurred by EE in running my contract in the past 12 months?
  Yes or No?
  
• Give the statements above supporting question 8 Ofcom believes that the price variation clause is compliant with OFT Group 12 guidance (12.3)
  Yes or No?
  
  For reference - “12.3 A price variation clause is not necessarily fair just because is not discretionary – for example, a right to increase prices to cover increased costs experienced by the supplier. Suppliers are much better able to anticipate and control changes in their own costs than consumers can possibly be. In any case, such a clause is particularly open to abuse, because consumers can have no reasonable certainty that the increases imposed on them actually match net cost increases”
  
  
  
  
  
  
• Ofcom believes that the pre 23rd January 2014 definition of Material Detriment that I have deduced (Material Detriment = changes that are not to a consumers benefit or neutral on the consumer) by reference to:

• The UTCCRs (Group 10)
• USD 20/22
• Statements by Ofcom on GC 9.6
  Is incorrect?
  Yes or No?
  
  Finally (and not a yes no answer) – you have said that:
  “…our view that EE’s new term does not enable it to raise prices in a way that is likely to be materially detrimental, so changing from the old term to the new one was not likely to be materially detrimental either”

• Can you tell me the criteria and definition of Material Detriment that you have used (in both contexts of the usage in that quote), AND where I can check that definition with regards to regulations and previous Ofcom statements?
  
  The above 11 questions do introduce some new points, but nothing which Ofcom should not have already considered when reaching the conclusions that it has, so as stated before this really should take a very small amount of your time and it should be possible to respond by return.
  
  Regards

RandomCurve

FMI-4


Dear Lynn,





Thank you for your email of 26 June 2014 responding to my earlier email. I will consider taking this further with Graham Howell in due course. However as you have appeared to have misunderstood the two core questions I will need to repose them in light of the apparent mis-understanding to ensure that any complaint submitted is on the correct basis (and in understanding the questions better Ofcom may have a different view to that expressed in your email of 26th June, which will be consistent with 95% of CISAS decisions made by legally trained adjudicators who have fully understood the question).





In addition to the misunderstanding of the two core questions I also need to follow up on your comments in relation to the definition of Material Detriment for pre 23rd January 2014 contracts and the following also remain unanswered from my email and I would be pleased if you could address these properly:

• Original Q2 – what evidence did you initially review?
  
  1. Can you confirm that Ofcom’s responses of 26th June mean that Ofcom did review the old and new terms before your email of 29th May
  2. If not can you detail the evidence Ofcom did review?
• Original Q4 - You have not explained how Ofcom concluded that the change in T&Cs
  
  1. “…do not purport to create a right to increase prices more than was previously the case…”
• Original Q5 - Can Ofcom explain – with its consumer protection remit – why giving consumers less scope to leave their contracts (in ongoing contracts) is beneficial to those consumers who are subjected to a price increase?
  
  Core Question –T&C Change.
  The core question is:

• Does EE changing its T&Cs to allow it to impose a higher price increase than was previously the case on 7.5 million consumers who cannot exit their contracts due to being in a fixed period require action by Ofcom (as a regulator with a statutory remit for consumer protection AND as a designated enforcer of the UTCCRs), under GC 9.6 (b & c Notice requirements); and/or Schedule 2, paragraph 1 (j) of the UTCCRs?
  
  In your initial response (29th May) Ofcom replied that they had not taken action because the change in T&Cs:
  “…do not purport to create a right to increase prices more than was previously the case…”
  Now that it has been established that Ofcom’s assessment of 29th May was incorrect, and therefore the substantive point on which the decision not to take action was incorrect it stands to reason that now Ofcom fully understands the impact Ofcom will be taking action - which would then be consistent with 95% of the CISAS case decisions made by legally trained adjudicators who are specialist in telecommunication matters who have understood the substantive point. Should Ofcom still decline to take action due to lack of resources (“administrative priorities”) then it seems that my characterisation that EE are above the law (on this matter) where Ofcom is concerned is indeed correct.
  For some unexplained reason in your response of 26th June now that Ofcom has realised that the new T&C does indeed “… purport to create a right to increase prices more than was previously the case…”, Ofcom have responded that no action is necessary as
  “We have given careful consideration to all relevant factors, including our view that the new term did not provide for price rises we considered likely generally to be materially detrimental” but this is an answer to a totally different question namely:
• Does EEs new T&C give it the right to impose a price increase which is of material detriment?
  The two questions are poles a part, the question raised (and requiring addressing by Ofcom) is a question over the right to change the T&C to impose a higher price increase than was previously the case. The question Ofcom have addressed (which is irrelevant) is if the new price clause is likely to cause Material Detriment. The two questions are significantly different as if EE had the new price rise clause in the original contract, that may have been legal, but that is not the same as allowing EE to move its actual price rise clause from one legal format to another if that change involves the customer having to suffer a higher price increase than was previously the case, I therefore request that Ofcom responds to the core question which was actually asked which is:

• Does EE changing its T&Cs to allow it to impose a higher price increase than was previously the case (regardless of the quantum) on 7.5 million consumers who cannot exit their contracts due to being in a fixed period require action by Ofcom (as a regulator with a statutory remit for consumer protection AND as a designated enforcer of the UTCCRs), under GC 9.6 (b & c Notice requirements); and/or Schedule 2, paragraph 1 (j) of the UTCCRs?
  In your response (should Ofcom still consider there is no need to take action to protect the consumer) I would like to know:

• how Ofcom inadvertently “transposed questions”

• Where under the UTCCRs (Ofcom is a designated enforcer) is there a Material Detriment qualification?
• If in your revised response you rely on the phrase “…all relevant factors…” please can you list what those factors are?
• If in your response you refer to Material Detriment can you – in terms of a change in T&Cs (not a change in price rise percentages):
  
  1. Clarify the definition of Material Detriment you are using
  2. Explain where that definition comes from?
  3. And confirm why it is the correct definition?
     
     
     Core Question – Which definition of Material detriment to use (Original question 13)
     The actual question is:

• As EE changed it price variation clause effective 26th March 2014 (this has nothing to do with the price rise effective 28th May 2014), is the new price variation clause subject to the new regulations effective 23rd January 2014?
  
  You have answered the question in terms of:
• Should the price rise effective 28th May be subject to the new regulations?
  
  Please can you answer the actual question asked?
  
  Ofcom have clearly stated that the “price rise will modify the terms of pre-existing contracts” and therefore the old regulation will apply. It is clear that the actual application of a price increase is indeed only a modification to an existing clause as no new contracts are issued. However in relation to the change in T&Cs effective 26th March 2014 the change was not a modification to an existing clause, but the removal of an existing clause with the replacement of a NEW clause this is adequately demonstrated by:

• When EE replaced the original price variation clause it had to issue new contracts (for example CVN01A became CVN01B) as the issuance of a new contract is not required for modifications (such as price increase) then it is clear that this is a NEW contract which was effective from 26th March 2014 and therefore must be subject to the regulation in force at the time (Ofcom guidance of 23rd January 2014).
• Additionally as the pre January 23rd 2014 EE contracts no longer exist (if they did customers could have escaped their contracts due to EE imposing a price rise higher than CPI) then consumers only have a contract that they can take legal action on dated from 26th March 2014 –which is 2 months after the new regulations came into effect. Applying the new regulation to a new contract effective 26th March would clearly not be applying the new regulations retrospectively. You clearly state that the “price rise will modify the terms of pre-existing contracts” and that pre-existing contract is dated 26th March 2014.
  As the clarified definition of Material Detriment is solely aimed at price variation clauses, then it stands to reason that any price variation clause which is amended after 23rd January 2014 must be subject to that regulation. As Ofcom is unable to apply new regulations retrospectively, then obviously EE cannot retrospectively change the T&Cs without them being subject to the new regulations – unless of course Ofcom is applying double standards which are weighted heavily in favour of the industry to the detriment of the consumers that Ofcom has a statutory duty to protect.
  Now that Ofcom understands that the original question 13 relates to the change in T&Cs effective 26th March 2014 and NOT the price increase effective 28th May 2014 can Ofcom clarify (with reasons) on which regulation (pre or post 23rd January 2014) EE contracts dated 26th March 2014 are subject to?
  
  Pre 23rd January 2014 Definition of Material Detriment
  I think we can agree that GC 9.6 does not define “Material Detriment”, so in the absence of a definition surely the best way to try and clarify the meaning is to understand why the term has been included and what the source regulation for GC 9.6 is. As you are aware the source of GC 9.6 is the USD which provides that ANY change to contract terms gives rise to a customer’s right to a penalty free termination. Therefore we must start from a base that the material detriment threshold is fairly low, as if it were a high threshold Ofcom would have not implemented the USD correctly.
  Ofcom itself has given an indication of things which are not of Material detriment “changes that are beneficial or neutral in their impact”, it therefore follows, by definition, that changes that are not beneficial or are not neutral are of material detriment.
  The above seems to be the best definition of pre 23rd January 2014 Material Detriment as I can find and it closely follows the USD whilst allowing some flexibility –and the words themselves come from Ofcom who supported retaining the inclusion of the phrase “Material Determent” and therefore must know what definition they intended (otherwise Ofcom would have been negligent in retaining the phrase).
  As you appear to be challenging that definition for Pre 23rd January 2014 can you provide the official definition, or at least explain why my conclusion is not correct (saying that the part I quote is not an exhaustive definition can only hold if you provide the exhaustive definition or reasonable alternatives that fit with the intentions of the USD and previous Ofcom announcements). For instance I assume RPI increases were considered to be not of material detriment as they were (in real terms) neutral – however now RPI has been proven (please check with the ONS) to overstate the true cost of living, and RPI increase is a REAL TERMS increase and therefore is not neutral (broadly neutral not being relevant – it is either neutral or it is not).
  
  I look forward to receiving Ofcom’s revised view on EEs actions based on the proper facts of the case, which hopefully will lead you to the conclusion that action to protect 7.5 million customers is required by Ofcom in order to fulfil Ofcom’s statutory duty to protect consumers and as a designated enforcer of the UTCCRs.
  
  
  
  Regards

g6jns_2

Brilliant!

jocklatic

Email sent - thanks RC for putting FMI 4&5 on thread which enabled me to attach onto email. Hopefully Ofcom may ACTUALLY answer the questions & perhaps take some action tho i won't be holding my breath.
Anyone not having already sent the email to Graham Howell at Ofcom yet then would be grateful if you could because it all leads to more pressure on them which in turn may lead to them putting pressure on EE to get their act together (even if those who have won their cases against EE/ Orange/Tmob sent an e mail would be great )

:beer: