Mobile phone providers 'are worst private sector debt collectors'

Citizens Advice has said that customers should be allowed to set their own monthly bill caps

Updated: 

Mobile phone providers need to act more responsibly to help customers avoid debt, starting with letting them set their own monthly bill caps, a charity has said.

Citizens Advice has labelled mobile phone companies the worst private sector debt collectors, and said customers should be allowed to take their own steps to limit usage to avoid racking up bills they cannot pay.

The charity's Falling Behind report concluded that companies "sometimes play a significant role in people getting into mobile phone debt" after analysing 26,600 cases from last year totalling almost £11 million.

In some cases, providers did not make proper assessments of whether the customer could afford the contract.

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

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

The charity warned that many mobile phone users pay in arrears for extras outside their contracts, such as app purchases, texting a donation to a charity or calling premium rate lines such as directory enquiries, meaning bills could quickly spiral to hundreds or even thousands of pounds.

It has suggested that companies could help customers keep a lid on their bills by offering them a chance to set a monthly limit in a similar way to credit card accounts.

The report also ranks mobile phone companies as the worst private sector debt collectors on measures such as resolving disputes, setting affordable repayment plans and contactability.

Citizens Advice chief executive Gillian Guy said: "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."

The report also recommends that mobile phone networks should offer all customers the opportunity to transfer to a pre-pay or basic monthly tariff as an alternative to full disconnection and should inform consumers of sources of free debt advice when they first experience financial problems.

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