BT contract

boatman

Can BT expect to receive more money by me not finishing the contract compared with completing it?


The way their contract is currently arranged means that in some circumstances you will pay more to leave early than to complete the contract. If you leave before the end of the minimum term they charge £65 for the router(its free if you complete the minimum term), so in many cases the combined cost of the remaining monthly line rental is less than the monthly cancellation charge plus the router cost. Would I be within my rights to pay the remaining line rental but no more??

mije1983

Why can't you just send it back? That way you don't 'pay more to leave'.

boatman wrote: »

Would I be within my rights to pay the remaining line rental but no more??

Of course. I presume as you didn't like this term about the fee for the return of the router you got them to remove it from your contract at the outset?

boatman

It's 'free', a price of 0.00 in the initial order, it was only later in the tariff guide rather than the terms that it says there is a charge. It didn't have an asterisk next to it or explanation giving the real price as perhaps would be the right thing to do. You supposedly can't send it back because it's yours, although that would be the easiest thing to do.



But given that if I completed the contract it would be free, surely they need to accept that if I pay up the remaining line rental I should not have to pay for the router as I would have paid for the contract. They have got away with not having to provide a service and they won't have to pay the VAT from my payment as no service was provided, surely they should be happy to receive the remaining line rental rather than expecting even more??


It may well say there is a charge for the router in the terms, what I am suggesting is that those terms are not acceptable to what would be considered a 'fair' contract. Strictly speaking according to OFCOM guidelines, if a customer leaves early, the amount of the cancellation charge needs to reflect their actual losses, as they will no longer provide a service, will not offer customer service, will not pay VAT, so a fee of around two thirds of the original line rental would be about right.

mije1983

If you think it's an unfair term, and are confident it seeing it through to the end, then yes just pay the line rental and wait for the letters to come through asking for more money.

bris

Line rental is only part of the contract, they also make money on everything you do so they are potentially losing a lot of money on calls etc. The cost of the router is clearly stated an, asterix shouldn't be needed to get you to read what you are signing up for.


You are breaking the contract so they are enforcing it's terms, your fault not theirs.

unholyangel

boatman wrote: »

It's 'free', a price of 0.00 in the initial order, it was only later in the tariff guide rather than the terms that it says there is a charge. It didn't have an asterisk next to it or explanation giving the real price as perhaps would be the right thing to do. You supposedly can't send it back because it's yours, although that would be the easiest thing to do.



But given that if I completed the contract it would be free, surely they need to accept that if I pay up the remaining line rental I should not have to pay for the router as I would have paid for the contract. They have got away with not having to provide a service and they won't have to pay the VAT from my payment as no service was provided, surely they should be happy to receive the remaining line rental rather than expecting even more??


It may well say there is a charge for the router in the terms, what I am suggesting is that those terms are not acceptable to what would be considered a 'fair' contract. Strictly speaking according to OFCOM guidelines, if a customer leaves early, the amount of the cancellation charge needs to reflect their actual losses, as they will no longer provide a service, will not offer customer service, will not pay VAT, so a fee of around two thirds of the original line rental would be about right.

If it is not subject to VAT/exempt then they cannot charge VAT on it (and to do so without handing it over to HMRC would be fraud). However its not strictly for cancelled services. Its cancellation charges - because those are designed to compensate the party not in breach and therefore do not attract VAT (as its not a charge for services at all).

But looking at their cancellation charges, I'm not sure why you think in some instances they'd be paying more? Most of their cancellation charges seem to be around 40-70& of the normal fee chargeable.

https://www.productsandservices.bt.com/assets/pdf/BT_PhoneTariff_Residential.pdf

The above details the monthly early termination charge for, what seems to be, every package they've ever offered. As for the payment for the goods....what do the T&C's say? If it includes a clause like the blurb in the above link for "set-top box deferred payment charge" then the only avenue you'd have to pursue it is that its punitive and a disguised penalty. But if the clause makes the charge pro-rata (so on a 12 month contract, you pay 1/12th of the full price per month remaining) then you might struggle.

boatman

bris wrote: »

Line rental is only part of the contract, they also make money on everything you do so they are potentially losing a lot of money on calls etc. The cost of the router is clearly stated an, asterix shouldn't be needed to get you to read what you are signing up for.
You are breaking the contract so they are enforcing it's terms, your fault not theirs.

With regard to additional profits, it says in OFCOM guidance:


"We do not consider that it is likely to be fair to include in an ETC recovery of anticipated profits from charges for (optional extra) services, or other sources of revenue, which are not themselves part of the consumer!!!8217;s contractual obligations (assuming the consumer would not do things, and incur charges, where he is not required to do so under the contract). This excludes from a fair ETC, in our view, charges for calls outside any inclusive bundle on a fixed voice or mobile phone contract, for example."

So, no, any potential losses are not counted.


If you have 1 month left on contract, It's £30 to complete the contract.


If you leave one month early, its £20.50(ETC) + £65(router)=£85.50.



I think the important point is that if you complete the minimum term the router is free, and the guidance says:
"We consider it likely to be unfair if a CP sought to recover in an ETC a sum that would put it in a better position than if the consumer had performed his contractual obligations (and no more). This is the position the ordinary law would seek to put the CP in"

I would read that as regardless of what terms they may have, they cannot charge me more to leave early than to complete the contract. So they can charge for the router, provided I do not pay more than I would to stay and get the router free.

I think the way BT would try to get out of it is to say that the router was not part of the ETC, I would say that because the router forms an integral part of the contract and is free on completion, I should not pay more than the remaining months line rental minus the VAT, as they won't have to pay that.


I would consider a 'fair' term would be something along the lines of £66 for the router at 6 months or more left on the contract, then reducing by £11 for every month left, e.g 2 months left £22 to pay for the router.





.

bris

boatman wrote: »

With regard to additional profits, it says in OFCOM guidance


.

I didn't say they could charge you for extra profits.


What I am saying is the router is factored in for a completed contract so if they make money out of that completed contract so be it.


The clause that you pay for the router if you leave early is perfectly acceptable as it is factored into the price for a completed contract. You broke that contract so now the router needs paid for.

boatman

unholyangel wrote: »

But looking at their cancellation charges, I'm not sure why you think in some instances they'd be paying more? Most of their cancellation charges seem to be around 40-70& of the normal fee chargeable.

Many of there packages are sold at a discount, so the standard price is somewhat inflated compared what many would actually pay.

As I have said, I would be paying nearly triple the amount to leave with a month to go compared with paying the contract off.


As you say, you won't pay VAT on an ETC as no service is provided, its compensation to cover their actual losses.

boatman

bris wrote: »

I didn't say they could charge you for extra profits.

What I am saying is the router is factored in for a completed contract so if they make money out of that completed contract so be it.

The clause that you pay for the router if you leave early is perfectly acceptable as it is factored into the price for a completed contract. You broke that contract so now the router needs paid for.

I believed you were referring to charges for phone calls I may make which would bring them profit.

The router is free after 12 months so there is no profit to be made. If I paid off the contract minus the VAT they would be making more profit than if I stayed because they would not have to provide customer service, a phone/internet line, maybe sell my line to someone who currently can't get broadband because the distribution box is full.


[STRIKE]An unfair term as per the UTCCR's:
requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;[/STRIKE]

OFCOM guidelines:
80.1 We consider that an ETC is likely to be fair where:
it is never greater than the amount of the (usually monthly)
contractual retail payments remaining due at the date of termination



This is a link to the guidance, section 58 to 84:

https://www.ofcom.org.uk/__data/assets/pdf_file/0012/40620/guidance.pdf


Ultimately is it fair for them to make more profit by me leaving than staying?

KeithP

The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCs) was replaced by the Consumer Rights Act on 1 October 2015.