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Mobile providers 'dragging their heels' over customer debts

Friday, January 22nd 2016 by Ellen Branagh

Mobile providers should act more responsibly to help customers avoid getting into debt, according to a new report.

Citizens Advice said providers should do more, such as offering customers a chance to set a monthly cap on their bills, to help people avoid getting into financial strife.

It accused providers of ‘setting customers up to fail’ by offering them contracts they can’t afford to repay.

The Falling Behind report, released today, includes analysis of 26,600 mobile phone debts from last year totalling nearly £11m.

It found that bills can spiral out of control when mobile customers pay in arrears for extras outside their contracts like app purchases, texting charity donations or calling premium rate lines.

The report found in some cases providers didn’t make proper assessments of whether a consumer could actually afford the contract.

There were also examples of people taking out multiple mobile contracts despite already being in debt to another company.

One person who visited Citizens Advice had debts totalling more than £3,000 across six different phone contracts.

Researchers also criticised mobile companies' bad debt collection practices, accusing them of “lagging behind” other sectors like energy and banking.

A league table drawn up by the charity ranked mobile providers as the worst private sector debt collector, with an approval rating of 37% – below banks, energy companies and private debt collection firms.

To create the league table, more than 250 of Citizens Advice’s debt specialists rated private sector creditors against seven factors, including how they resolve disputes, set affordable repayment plans and how easy they are to contact.

Advisers found that mobile companies were poor at setting affordable repayment plans and even when debts were being disputed, such as the amount of a bill, customers continued to be chased for money.

'Lagging behind'

Citizens Advice chief executive Gillian Guy 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.”

She said other sectors that deal with essential services have improved how they handle debts in recent years, so mobile companies 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.”

The report also recommended that telecoms regulator Ofcom should require mobile providers to publish the steps they will take to recover unpaid debts.

It suggested that mobile phone networks should offer all consumers the opportunity to transfer to a pre-pay or basic monthly tariff as an alternative to full disconnection.

It also said that multiple attempts should be made to contact and negotiate with consumers before starting debt collection, and no attempt should be made to collect bills that are being queried until the dispute is resolved.

Mobile phone networks should inform consumers of sources of free debt advice when they first experience financial problems, the report also recommended.

Earlier this week, a report from the Advertising Standards Authority (ASA) and Ofcom found that broadband adverts are confusing and misleading consumers.

Research commissioned by the watchdogs found that 81% of people shown a broadband ad were unable to calculate the total cost of the contract.

The ASA said it would work with broadband providers to change the way packages are advertised and will decide on a final recommended approach for advertisers by 30 May.

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