O2 mid-contract price hikes: First Martin Lewis writes to the Chancellor, then Government writes to Ofcom – now the regulator responds
Tighter rules are urgently needed on mid-contract broadband, mobile and pay-TV price hikes to avoid them fuelling inflation, MoneySavingExpert.com founder Martin Lewis has said – first in a letter to the Chancellor Rachel Reeves, and then in a discussion with technology secretary Liz Kendall. Meanwhile, Ms Kendall wrote to regulator Ofcom – and it has now responded, asking to "meet urgently".
This sequence of events comes after O2 announced that all existing customers would see their bills rise by 40% more than they were told in April 2026, with monthly mid-contract price hikes increasing from £1.80 to £2.50.
We covered this on Tuesday 28 October. At the time, Martin said: "This makes a mockery of Ofcom's new 'pounds and pence' consumer protection regime". He then gave O2 and telecoms regulator Ofcom both barrels on ITV's Good Morning Britain on Wednesday 29 October. Since then...
Martin Lewis writes to the Government
Here's a copy of Martin's letter to the Chancellor in full, sent on Thursday 30 October:
To: Rt Hon Rachel Reeves MP, Chancellor of the Exchequer
CC: Rt Hon Liz Kendall MP, Secretary of State, DSIT
CC: Dame Melanie Dawes, Chief Executive, Ofcom
30 October 2025
Dear Chancellor,
I am writing to request urgent action to, at the very least, tighten Ofcom's existing rules over unannounced mid-contract price hikes for mobile, broadband and pay-TV providers. O2 has just announced a route to circumnavigate these consumer protections to raise prices. Without an improvement in protection, it is now possible, or even likely, more firms across all the sectors will follow O2's new method, which could add up to hundreds of pounds for households, making the cost-of-living crisis worse and fuelling inflation.
I was one of those who, for many years, had loudly and strongly called and lobbied for a ban on mid-contract above-inflation price hikes. Ofcom's new rules aimed at controlling these came into force in January this year. The method was not the one I would've chosen, but at least it was something. Now, sadly, its flaws have been exposed.
The change meant Ofcom banned contracts that included clauses linking rises to inflation, and instead requires broadband, mobile and pay-TV providers to clearly show how much bills will increase each year in 'pounds and pence' - before people sign up. So, consumers would have a right to know the actual price paid throughout the length of the contract term.
Now O2 has announced that, from April 2026, up to 15 million O2 mobile customers will see their monthly airtime bills rise by more than it told them when they signed up (or declared when they wrote new terms to existing customers). It had said it would increase bills by £21.60 a year, yet the actual rise will be 40% more, £30 a year.
The rises O2 had told customers of in advance were already usually far above inflation. But now they will typically be at an annual rise of at least 7% and up to 30%. The highest increases are for those with cheaper deals – hitting those consumers who have tried to keep costs down the hardest.
These practices add more inflationary pressure to the economy. And if others follow suit, it could snowball.
So how did O2 get away with this, within the rules? By writing to people and telling them that within 30 days of receiving the price notification they can leave penalty free. In reality, this makes a mockery of Ofcom's new 'pounds and pence' consumer protection regime. The whole concept – that 'people will know what they'd pay'– is now a busted flush.
O2 knows it carries the power here, it will have done its sums, clearly this 'you can leave penalty free' rule is not an effective deterrent.
While all its impacted mobile customers can leave penalty free – and many should (I will be shouting loud and large for them to do so) – we know only a small minority will. Most will likely just have to suck up a rise that was more than they were told when they signed up. This particularly hits older and more vulnerable people who are less likely to switch.
There are many barriers to stop people ditching and switching, both real and perceived:
Information overload means many miss out on their rights. Customers who receive contact from firms like this usually just see 'price rise' and miss the bit below about their right to leave if they act quickly. If they wait until the price rise hits their bank account, it will be too late for them to leave without any early termination charges. Even a few who've watched my information videos on this change, where the issue is front and centre, have replied "I will leave O2, I will just have to wait to the end of my contract".
Many with separate handset contracts from the same firm tell me they are worried they will have to pay the remaining balance upfront in order to leave.
Some feel trapped by their signal, not willing to risk moving elsewhere because it's the only provider that works for them (even though virtual mobile networks offer similar signals).
It's regrettable that when Ofcom consulted on these changes it didn't listen to the simpler proposal I and others made to simply ban above-inflation mid-contract price rises (or any mid-contract rises). It is even starting to look like Ofcom's change has resulted in many customers, especially those on cheaper tariffs, seeing far bigger price rises than they would've done on the old mid-contract inflation-linked price rises.
At a time when the Government is focused on the cost-of-living, household bills and getting inflation down, it is vital that swift action is taken. I look forward to hearing what action the Government and Ofcom will take to protect consumers.
Kind regards,
Martin Lewis
Founder and Chair, MoneySavingExpert.com
Next Martin spoke to the technology secretary
Ms Kendall sent a letter to Ofcom (this was sent on Friday 31 October, but was shared with MSE on Monday 3 November under embargo until 6pm) putting forward a number of asks on mid-contract price hikes. After reading this letter, Martin had a call with Ms Kendall. Following the call, Martin wrote on X:
Just had a good call with @LeicesterLiz [Liz Kendall] about O2's price hike on a price hike, that makes a mockery of @Ofcom's rules. It's bad for consumers and now it's broken the taboo; if others follow suit, it could increase inflation! My three key suggestions were:
Just scrap current rules and simply ban above inflation mid-contract price hikes.
Banning inflation-linked hikes, which is what Ofcom's done isn't the same (ie. while you can't say 'we'll increase by inflation +3%', you can say 'we'll double your price!').
O2's prices rises are 7% to 30% year-on-year; far more than they were for many under the old inflation-linked hikes system.
In the interim while that's looked at...The current rule says if mobile, broadband and pay-TV firms hike prices mid-contract by more than they said they would when people signed up, then customers have a right to leave penalty free. There are two problems with this...
a. They – deliberately? – don't communicate it well so many miss it. They need to be made to put it in font 50 at the top of all communications.
b. You have 30 days after notification to leave penalty free. Yet most people miss the notifications; it feels like junk. They only notice it when the price actually rises. So there should be two 30-day windows you can leave penalty free:
i) after notification,
ii) after the hike.Firms should not be able to unilaterally decide to increase prices by more than they said at the start of the contract. If it is going to be allowed, it should be only in emergencies (eg. a huge unexpected rise in underlying costs) and they should have to apply to Ofcom for permission to do it.
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I'm thankful to the secretary of state for listening to me on this and glad she was already up in arms about it too. She is going to investigate what can be done...
PS. If you're wondering why I say ban above inflation mid-contract price hikes, rather than ban all price hikes? This is partly because I lobbied for changes for years on this, and there was huge reticence, so I'm trying to come up with practical solutions that could be implemented.
Plus, over two-year contracts costs can change, so if you ban any rises, then you risk firms over-inflating prices as contracts start as a provisional against possible cost increases over the contract period. So all in all, no above inflation rises seems reasonable.
The Government wrote to the regulator
Ms Kendall said: "I believe we need to go further, faster. I am keen that we look at in-contract price rises again." Her key asks of Ofcom – which she's given it until Friday 7 November to respond by – are as follows:
-
Conduct a rapid review of how easy it is for people to switch free of charge, and within the 30 days, when their provider increases prices above the levels specified in their contract.
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Request telecoms companies urgently communicate about upcoming price increases to people with pre-January 2025 contracts – who would normally receive increased price details in an inflation percentage – and make clear the increase using pounds and pence, so they have the full picture.
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Assess the impact of January's changes, where Ofcom required companies to detail mid-contract price rises in pounds and pence rather than by inflation, to determine if more transparency is needed to assist consumers.
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Consider adopting a regime similar to the insurance sector, where existing customers are offered the same deals as new customers when they are looking to renew their contract.
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Share views on how to achieve increased transparency in telecoms bills, in light of recent changes to electricity bills, to provide for clearer details about the specific costs of different components of those bills.
A spokesperson for HM Treasury added: "The Chancellor has been clear that everyone in Government has a responsibility to bring inflation down and we are committed to a telecoms market that works for everyone – where bills are clear, fair and transparent."
On Thursday 30 October, Ofcom released a statement saying: "We are disappointed by O2's decision. This goes against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up. Today, we've written to the major mobile companies reminding them of their obligations to treat customers fairly."
Ofcom has now responded to the technology secretary
In a letter sent on Friday 7 November (link opens PDF), Ofcom's chief executive, Dame Melanie Dawes, suggested that she and Ms Kendall "meet urgently" to discuss the issues the technology secretary raised.
Dame Melanie said: "As we have said, O2's recent actions on in-contract price rises go against the spirit of our rules, which are intended to give customers clarity and certainty about what they will pay. Last week, we wrote to major telecoms providers to remind them of their obligations in relation to mid-contract price changes and their commitments to the Fairness for Customers agenda.
"We said that we would be concerned if companies introduced mid-contract price rises in such a way that it risked undermining that clarity and certainty for consumers at the point of signing up to a contract. We are monitoring compliance with these obligations closely, particularly O2."
The telecoms regulator has also responded to Martin
On Friday 14 November, Martin then explained on X that Ofcom had responded to him on one of his points of concern. Martin wrote:
O2 price hike on a price hike update!
I complained to @Ofcom that O2 was telling people when they were leaving airtime plans they "had to pay the handset in full," which is terrible, confusing phrasing and sounds like you can't continue paying by the month (you can!).
I'm pleased Ofcom has sent me this... "If you've been told your price will go up by more than what you signed up to, you've got 30 days to leave your airtime plan penalty-free if you want, and you can keep paying off your handset in instalments.
"We're concerned about people being confused by the information O2 has given about device plans. We've told O2 to change this so it's clearer."
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