Martin Lewis issues warning over 'big problem' with new mobile and broadband rule

The 52-year-old Money Saving Expert founder, who is a BBC and ITV regular, has issued an update over Ofgem banning mid-contract price hikes.
-Credit:Reach Publishing Services Limited


Martin Lewis has issued a warning over a "big problem" he has with new broadband and mobile rules. The 52-year-old Money Saving Expert founder, who is a BBC and ITV regular, has issued an update over Ofgem banning mid-contract price hikes.

“Finally, there’s a ban on firms hiking mobile and broadband bills mid-contract linked to inflation. Yet the way they’ve done it means some winners and some losers," Mr Lewis said. “Yes, the 17% mid-contract inflation-linked rises are now banned. Good for transparency, however, in practice, some will now face even bigger ones.”

He added: “Millions are being ripped off by overpaying on mobile and broadband.” Speaking out, the 52-year-old Money Saving Expert founder went on and said: “Virgin Media had a deal the other day on broadband – around £25 a month.

ADVERTISEMENT

READ MORE: DWP set to launch bank account checks on people 'who don't claim benefits'

READ MORE: State pensioners born before 1958 urged to make one phone call within next 48 hours

READ MORE UK faces -6C snow blizzard which will begin 'within next 48 hours'

"Then it says in April, you will pay £3.50 a month more. And the following April, because it was a contract that lasted over two Aprils, you’ll pay another £3.50 a month more. So £25 will go up to £28.50, and £28.50 will go to £32 a month by the time your contract finishes.”

“That’s the new way they’re going to communicate, and they’re allowed to do it. My problem with this is, while I think this is good for transparency and at least you’ll understand what you’re paying, I wanted to see them ban any mid-contract price rises that are above inflation. But that isn’t happening.

ADVERTISEMENT

“In fact, for some people, the percentage rise will be far greater than it was with inflation. Think about it: if you’re increasing everybody’s contract no matter what they’re paying by £3.50, someone paying £20 a month will see a massive rise - 16%, 17%. Somebody paying £40 a month, they’re seeing a rise of 8% or 9%.

“So we’re going to see some shifting of the pricing mechanisms that go on here. And what it also allows firms to do, this new model that Ofcom has come up with is it allows firms to price low early on - for a low headline price - but then bump up higher prices year by year.”

He added: “Let’s make this extreme - no one’s doing this at the moment - you could start at £20, but then in a few months time in April, it’s going up to £30. In the year after, it’s going up to £40. That could legitimately work within the rules.”

He said: “14 million people are out of contract on their mobile phones. Text ‘INFO’ to 85075, and that’ll tell you whether you’re out of contract in most cases but not in every case. It can’t work in every system.” He added: “Go and make sure you’re not being ripped off on your broadband and mobile.”