Let mobile phone customers cap monthly bills, says Citizens Advice
Mobile phone providers labelled worst private sector debt collectors
Mobile phone customers should be allowed to set monthly caps for their bills to avoid getting into debt, according to Citizens Advice.
In a new report out today the national charity calls on providers to act more responsibly to help customers avoid building up debts.
Many mobile phone customers pay in arrears for extras outside their contracts - like app purchases, texting a donation to a charity or calling premium rate lines such as directory enquiries - so bills can quickly spiral to hundreds or even thousands of pounds.
Citizens Advice says mobile providers could help customers manage their bills by offering them a chance to to set a monthly bill limit, similar to the way credit card companies have to.
The Falling Behind report, which includes analysis of 26,600 mobile phone debts from last year totalling nearly £11million, says that sometimes companies play a significant role in people getting into mobile phone debt. In some of the cases providers did not make proper assessments of whether the consumer could actually afford the contract.
There were also examples of people taking out multiple mobile phone contracts despite already being in debt to another mobile phone company. One person who visited Citizens Advice had more than £3,000 in debts across six different phone contracts.
Researchers also criticise mobile phone companies of bad debt collection practices, accusing them of ‘lagging behind’ other private sector companies like energy and banking.
The charity drew up a league table comparing how sectors collect debts - more than 250 of its debt specialists rated them against seven factors, including how they resolve disputes, set affordable repayment plans and how easy they are to contact.
Mobile phone providers were ranked the worst private sector debt collector with an approval rating of just 37 per cent, far below banks, energy companies and private debt collection firms. Advisers thought mobile companies are poor at setting affordable repayment plans - only 15 per cent agreed companies ‘almost always’ agree to set payments that clients can afford.
The report found that even when debts were being disputed - for example over the amount of a bill - customers continued to be chased for money.
Gillian Guy, Chief Executive of Citizens Advice, said:
“Mobile phone firms are lagging behind in debt collection standards.
“Our evidence shows companies too often don’t set affordable debt repayment plans, escalate debts too quickly and fail to co-operate with debt advisers. In some extreme cases companies set customers up to fail by offering them contracts they can’t afford to repay.
“Other sectors that deal with essential services have improved how they handle debts in recent years so mobile phone firms have no excuse for dragging their heels.
“Giving customers the chance to set a cap on their bills will give consumers more power and help ensure they don’t build up unaffordable charges. The Government can also help by ensuring people can access free and independent money advice to avoid getting into debt in the first place.”
As well as offering customers a bill limit, the report recommends:
Ofcom should require mobile phone providers to publish the steps they will take to recover unpaid debts.
Multiple attempts should be made to contact and negotiate with consumers before starting debt collection.
Mobile phone networks should offer all consumers the opportunity transfer to a pre-pay or basic monthly tariff as an alternative to full disconnection.
No attempt should be made to collect any bills which are being queried until the dispute is officially resolved.
Mobile phone networks should inform consumers of sources of free debt advice when they first experience financial problems.
Best debt collection practice league table of private sector, as rated by Citizens Advice advisers:
|2||Private debt collection agents||63%|
|3||High street banks||62%|
|5||Mobile phone providers||37%|
Notes to editors
- The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
- The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
- You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
- Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
- Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.