Three refuses to slash charges for out-of-contract customers

Three has refused to cut charges for out-of-contract mobile phone customers despite Ofcom warning the industry is overcharging people by almost £200m a year. 

The mobile operator said the regulator risked “creating a stagnant market whereby consumers are not encouraged to shop around for the best deal at the end of their minimum term” by urging companies to slash their rates. 

“We have worked closely with Ofcom to encourage consumer engagement, particularly around auto-switch reforms, end of contract notifications and best tariff advice,” a spokesman for the company said. 

Ofcom has been conducting a review into the industry for the past year, focusing in particular around contracts which bundle together the cost of a handset and the cost of data usage each month. 

Around 1.4 million people are on those contracts, and Ofcom said they had been charged more than they should have, once their initial contract period ended and they had paid off the cost of the handset, as equivalent SIM-only deals were cheaper.

On average, those people had been charged just under £11 each per month more than if they were switched onto a SIM-only deal, meaning they had, in total, overpaid by £182m in a year. 

Ofcom said mobile operators, including Virgin Mobile, Tesco Mobile, O2 and Vodafone, had agreed to reduce prices or move customers only SIM-only deals when their lock-in period expired. 

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