If your mobile phone provider makes increases to your fixed monthly price by more than the Retail Price Index (RPI), you should be able to exit the contract if you’re still within your minimum term without incurring a penalty fee.
With the help of thousands of you as part of our Fixed Means Fixed campaign, for all new fixed contracts from 23 January 2014, you can exit without penalty for any price rise at all. This is unless you were told at the point of sale that the price would definitely be increasing.
Read on to find out more.
Cancel a mobile contract
Generally, the only way to guarantee you’re not penalised for cancelling a contract is to cancel within the cooling-off period.
Otherwise, if you cancel before the minimum contract term is up, you may have to pay an early termination fee. This can be very high.
For example, if you sign up to an 18 month contract and want to cancel in the second month, you may have to pay 16 months' worth of fees.
But you may be able to avoid these fees if you want to cancel your contract as a result of changes made by your operator.
For example, if your contract allows your operator to increase your contract by more than the Retail Price Index (RPI), you could challenge this clause as unfair.
For more information, see our guide on cancelling a contract.
Challenging price hikes
Which? believed it was unfair that millions of mobile phone users were being caught out by unfair price rises.
We wanted the rules changed so that all people could exit a 'fixed' contract without penalty if prices do go up.
We also wanted the price, and all other features of a contract (minutes, data etc), to be fixed from the day of agreement to the end of the contract.
With the support of more than 58,000 of you, we convinced Ofcom to take action.
Price hike? Cancel without penalty
Under rules introduced by Ofcom in 2014, if you took out a contract after 23 January 2014 and your provider hikes prices on that contract, you can cancel without paying any penalty fees. This is the same for all telecoms providers including mobile phone, broadband and landline contracts.
However, if you were told at the point of sale that the price would definitely be increasing, it may be more difficult to leave without a penalty.
Which? helped push for these changes with the support of more than 58,000 of you who felt it was unfair that millions of telecoms customers were being caught out by unfair price rises.
Together we convinced Ofcom to take action, and as a result fixed contracts mean fixed prices from the day you sign the agreement to the end of the contract.
Mobile contracts and RPI
For contracts taken out before 23 January 2014, there are no clear rules in place that allow you to cancel because of price hikes during your contract.
Your mobile phone provider may be able to hike the price of your fixed contract by the rate of RPI.
However, for fixed contracts entered into after 23 January 2014, you are able to exit without penalty if your provider does choose to hike up its prices, unless you were told at the point of sale that the price would definitely be increasing.
Our price rise campaign and O2
O2's existing customers
Ofcom's new guidance only applies to contracts taken out after 23 January 2014.
Unfortunately, the new rules permit price rises for existing customers and new customers as long as they're told about this at the point of sale.
As a result, O2 is allowed to raise the monthly prices by RPI for consumers who took out a contract prior to this date.
O2 announced a mid-contract price hike of 2.7% for its eight million pay-monthly customers, which came into effect in March 2014.
We were disappointed by this announcement.
O2's new contracts
People who take out a new O2 contract after 23 January 2014 are covered by the new Ofcom guidance.
However, O2 has found a loophole - and we're not happy about it.
The loophole allows O2 to apply annual RPI price rises on the condition that the rise is made clear at the point of sale, and the price rise is guaranteed.
Although O2's contract variation is within the new rules, we're asking O2 to do the right thing by its customers.