Make sure you're not getting stiffed by your mobile phone company

It's not just the financial services industry that makes a habit of overcharging its customers. Mobile phone companies do it too, says Merryn Somerset Webb. But you don't have to stand for it.

180920-mobile-phone-companies

If you're overpaying on your mobile phone contract, call, cancel and complain.
(Image credit: This content is subject to copyright.)

Charging you for things you don't need; not quite explaining to you that you are being charged for those things; feigning innocence when caught all sounds a bit high street bank doesn't it? Bad news: your mobile phone company has been at it at it too.

Most mobile phone deals are sold on two year contracts. You sign up to a deal that commits you to paying a set amount every month for the full period, part of which is in payment for the phone itself. At the end of the two years you own the phone (so the credit part of the arrangement comes to an end). You should then be charged only for your data and phone usage or so you would think.

Turns out that's not how it works. Citizens Advice has released a study showing that the three big mobile providers (EE, Vodafone and Three) continue to charge those who don't actively apply to change their deal for the phones they already own (that's 36% of people). How much? On average £22 a month.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

But that number could soon rise rather sharply: those currently on a deal that includes the purchase of an iPhone 8 could find themselves paying up to £46 a month for a phone they already own if they don't change deal when their contract ends. How's that for an inertia penalty?

The companies say that they send out notices when contracts end to let people know and suggests that it is up to them to change their deal. That sounds like a reasonable-ish justification for double charging. But it isn't really.

The situation only comes about in the first place because the providers have long got away with hiding the cost of the handset in the overall price (I would defy anyone who has even spent half an hour in an EE shop trying to get a new phone sorted to have any idea of the breakdown of the final price).

If this industry was being endlessly bothered to produce more transparency in its pricing as the banking and asset management industries are and as Citizens Advice suggests it should be they would no longer be able to do this.

It is time to start bothering them. But before you sit down to write to your MP on the matter, check your own contract. Are you overpaying? If you are, call, cancel and complain.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.