Consumer group Which? said that mobile customers are losing out on £5.42 billion a year, either by paying for texts, minutes and data they do not use, or paying extra charges because their phone package is too small.
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Seven in ten mobile customers could possibly save £159 each year on average by switching to a contract that better suits their needs, with three-quarters able to save at least £50 a year.
Which? has called on mobile phone companies to improve the transparency of their pricing to ensure customers get a better deal.
According to its Unlock Better Mobile Deals campaign, more than four in ten people with a mobile contract think there is a better value tariff out there for them. However, regulator Ofcom’s research shows that almost half have never switched supplier.
Which? executive director Richard Lloyd said: “It’s shocking consumers are overpaying by billions of pounds for mobile phone contracts that just don’t suit their needs.
“Mobile phone companies must do more to help people get the best deal.
“If we don’t see mobile firms making voluntary improvements then we will ask Ofcom to step in.”
He added: “With only three in ten people trusting mobile phone services, we want mobile phone companies and Ofcom to make switching hassle-free and prices transparent.”
Which? wants mobile firms to unlock handsets automatically for free, notify customers at least a month before the end of their contract and give them information on the best deals to suit them; and show the monthly cost of the handset separately from the service charge on bills.
Currently, most handsets are “locked” to a particular network. If customers want to use their handset on a different network – or abroad – they have to unlock them, which can cost up to £20.99, depending on the provider – and some take up to 28 days to do this.
Various independent mobile phone shops will also provide the service for a smaller fee, but that can often invalidate warranties.
Which? also targeted Ofcom, saying it wants the regulator to introduce a system where the provider gaining the new business is responsible for the switch, to make the process easier for consumers.
The practice is already in place in some other industries, such as banking, where people switching current accounts can have their direct debits and standing orders automatically moved across for them.
Which? said some providers were already simplifying the billing and switching process, such as O2, whose Refresh initiative splits the bill in two so customers can see exactly how much they are paying for minutes, texts and data separately from the cost of the handset.
Ofcom added that “all mobile phone companies should be doing this”. It said that Tesco mobile, Virgin and Giff Gaff also have similar plans.
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