Dialling down debt
Campaign win! We worked with MPs and Peers to support an amendment to the Digital Economy Bill . The amendment was passed and the law has been changed so that all mobile phone providers will need to give customers the option to put a cap on their monthly bills.
We’re campaigning to improve the debt collection practices of mobile phone providers. This includes letting customers put a cap on their monthly spending.
Mobile phones are now a central part of life. Approximately 95% of households own one and for an increasing number of people, they only have a mobile phone (no landline or broadband).
This is especially true for lower income households who are 5 times more likely only to have a mobile phone than the highest earning group.
Despite these changes, the mobile phone industry lags behind other essential markets - such as energy and water - when it comes to working with customers who have fallen into debt.
Our advisers help approximately 40,000 clients a year with mobile debt issues. In 2014/15 our specialist debt advisers helped clients resolve debts totalling almost £11 million.
Our report Falling Behind [ 0.77 mb] found systemic failures in how debt is collected across the industry. We found that people who come to us for help and our advisers routinely face processes which stop them resolving debt problems. Communication is seen as poor, and advisers often reported that mobile phone companies are the most difficult and inflexible of all private sector creditors.
As people depend more and more on their mobile phones, the implications of mobile phone debt and disconnection become more severe.
What we want to achieve
We want mobile phone providers to sign up to our debt collection charter [ 240 kb].
It’s based on best practice across other regulated markets, and contains 5 commitments to help customers in debt.
We want mobile phone companies to:
Direct their customers to sources of free debt advice and collaborate with debt advisers acting on behalf of their customers.
Proactively make contact with customers who are experiencing payment difficulties.
Make it easier for customers to contact companies about their bill and negotiate repayment rates which reflect their ability to pay.
Suspend collection action when the customer reasonably disputes the debt.
- Help customers avoid debt by allowing them to set a cap on the monthly cost of their bills.
What we’ve done so far
Shreeta* was shocked to get a bill for £405. Her mobile phone provider said it was for call charges abroad. £405 was more than she earned each month, so she couldn’t pay the bill immediately. This resulted in the bill increasing by over £180 due to additional charges.
Dennis*, who is in his 80s, was shocked to find his monthly mobile phone bill was £124.81 instead of his normal fee of £8. His provider said it was because he had called an expensive service number. His mobile phone was disconnected until he paid a reconnection fee.
A cap on bill limits would help to ensure that consumers are not hit by unexpected debt that they are unable to pay back
*Names have been changed to retain confidentiality
We’ve been working with the main UK mobile phone providers to improve their debt collection practices by signing up to our debt collection charter.
Most have signed up to the first 4 commitments, but one remains a major challenge - letting customers cap their bills.
It’s really important that we change this. Unexpectedly high bills - usually because of people inadvertently using services not included in their standard monthly tariff - can make it harder for people to budget, especially if they’re on a low income.
Unexpected bills can also make existing debt problems worse - 70% of people who come to Citizens Advice for advice on mobile phone debt, also need advice on other debts.
Some mobile phone companies already offer a ‘bill cap’ to customers - but we want the whole market to give their customers the power to manage their spending.
To help do this, we've been working with MPs and Peers to support an amendment to the Digital Economy Bill which will mean mobile phone companies have to provide all customers with the option to put a cap on their monthly bills. Our amendment was passed and the law has been changed so that all mobile phone providers will need to provide bill caps.
- Today Parliament put mobile phone customers in control of their bills - Anne Pardoe (April 2017)
- Putting customers in control of their mobile phone bills - Anne Pardoe (February 2017)
- Parliamentary briefing for the Digital Economy Bill - House of Lords Report Stage [ 120 kb] (February 2017)
- Parliamentary briefing for the Digital Economy Bill - House of Lords Second Reading (December 2016)
- Mobile phone debt collection charter [ 240 kb] (October 2016) - Our charter to improve mobile phone debt collection practices
- Falling Behind [ 0.77 mb] (January 2016) - An assessment of debt collection practices in the mobile phone market