Mobile customers still being charged for handsets they have already paid for, consumer group warns

Loyal mobile phone customers could be being charged for their handsets after they have paid them off, a consumer group has warned.

Citizens Advice says Vodafone, Three and EE, three of the biggest mobile companies in the UK, are failing to reduce bills once phones bought under fixed-term contracts - which usually last for 12, 18 or 24 months - have been paid for.

It alleges people with Vodafone contracts are paying up to £38 a month for handsets, with EE and Three charging up to £34 a month, on top of charges for data, calls and texts.

The consumer group says customers are being penalised for loyalty and has called on industry regulator Ofcom to step in unless operators raise their game and make billing more transparent

Citizens Advice chief executive Gillian Guy said: "It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for.

"Phone providers must now make sure that any customers staying in a contract past the end of a fixed deal have their monthly bill reduced to reflect the cost of the handset.

"Providers could make it much easier for consumers to compare prices by separating out the cost of handsets from the cost of services like data and minutes for all contracts, that way it would be much clearer what they're paying for."

Once a contract has ended, customers have a choice of remaining with the same operator on the same contract, taking out a new deal or switching to another provider at the end of their fixed-term.

Citizens Advice's research found the over-65s were most likely to be caught out by the billing issue, with 23% of such customers on a handset-inclusive deal remaining on it for more than 12 months past the end of the fixed contract.

Telecoms regulator Ofcom said: "We share Citizens Advice's concern that some mobile customers who purchase a handset bundled with their service plan continue to pay the full monthly charge after their minimum contract term ends.

"We're already considering this issue as part of a wider project to help people shop around and secure the right deals."

The Government responded to the report by supporting the charity's recommendations, while mobile operators insisted nothing was being hidden.

EE said: "Separating phone and tariff doesn't always represent the best deal for consumers.

"It can sometimes result in them paying more, and EE customers have the flexibility to choose the tariff and upfront phone cost that's right for them.

"We send our customers regular updates about their options before and after they reach the end of their contract, and the vast majority of our customers upgrade to a new phone or move to a SIM-only plan near the end of their
contract."

Three said the terms of its contracts were always clear and customers were urged to get in touch if they wanted to change their plan at the end of the fixed term.

A Vodafone UK spokeswoman said: "Wherever possible, we contact customers nearing the end of their contract to offer them a range of options."

Liz Wynn, Sky (Frankfurt: 893517 - news) 's Director of Mobile, said: "When we launched Sky Mobile we wanted to shake up the sector with a fair and flexible approach, and the concerns raised by Citizens Advice is one of the key issues we wanted to tackle.

"That's why, with our Swap proposition, we don't overcharge for handsets and offer customers an automatic discount on their monthly cost as soon as their handset is paid for if they choose to keep it. We believe this transparency should be the norm for the UK mobile industry."