I recently took out a contract with a well-known mobile provider but, after some more research, I reckon I'd get a better deal elsewhere. Can I end the contract free of charge?
Thanks for your question, Derek.
Nowadays, a mobile contract means a one-year commitment at the very least. But what if your new provider hikes its prices halfway through your agreed term? Maybe you’re not getting the quality of customer service you were promised?
On the face of it, these are valid, reasonable grounds for the early cancellation of a contract. If only things were that simple.
Yes, there are some cases when you might be able to cancel early – we’ll examine them below – but, most of the time, be prepared to pay an exit fee.
So, let’s look at those instances where you may be within your rights to cancel for free:
When can I leave my contract?
The first fourteen days of any mobile contract is called the ‘cooling-off’ period. Consumer Contracts Regulations state you can leave a contract at any point during this window without incurring early termination costs.
Bear in mind, though, the only exception to this is if you’ve signed in person – for example, in a physical bricks and mortar store, and signed a contract. In which case, you’ll be bound to honour the contract from the get-go, with no cooling-off period.
If you try and leave after those fourteen days, expect to pay an exit fee as per the stipulations set out in the agreement.
Generally, you’ll be asked to pay for months that are left. So if you’re halfway through a twelve-month contract, you’ll need to pay the remaining six-months, usually in a lump-sum. Naturally, this could leave you severely out of pocket so try and cancel within those first fourteen days if you can.
What if my price goes up?
Rules set-out by telecoms industry regulator Ofcom say you can leave your mobile, landline or broadband contract without incurring an exit fee if the price rise is of ‘material detriment’ to you.
Essentially, this means the rise must be smaller than the retail price index – also known as RPI.
Ofcom also says: “Under General Condition 9.6, communications providers are required to give customers a minimum of one month’s notice of any change to their contractual terms that is likely to be of ‘material detriment’ and customers must be able to withdraw from their contract penalty-free following such notice.”
In plain English, this means your provider must send you a notification of the price-hike – via hard copy or email, depending on which you opted for.
If the increase is larger than the RPI, or they’ve failed to notify you altogether, you’re within your rights to cancel and switch to a new provider within 30 days of receiving the letter or email.
Generally, it’s difficult to prove material detriment. But according to Ofcom’s own guidelines: “An increase at the CP’s discretion, changing it to a price the consumer might not otherwise have chosen to pay over other offers on the market is, or is likely to be, materially detrimental.”
So if the price-hike isn’t in-line with RPI and well above what competitors charge, it’s definitely worth contacting your provider to see what they can do for you. They might even offer you a better deal, depending on the circumstances.
Bear in mind; if your provider warned of potential price-hikes in the contract and the increase falls within the RPI, an early termination charge will still apply.
Lastly, if your current phone came with the contract, there’s a good chance it’ll be locked, which means it’ll only work with one of the provider’s SIM cards. In this case, your old network should be able to unlock the phone. Depending on the network you’re with, this could be free but may cost £10 or £20.