On an O2 mobile contract? Your bill will rise 40% more than it told you – your rights as Martin Lewis says this 'makes a mockery' of the rules

Martin Lewis: "It's absolutely ridiculous. O2 should be hanging its head in shame, and I say most of its customers should be out there now, because you can leave penalty-free once you've been notified of this, checking if you can get a cheaper deal elsewhere.

"Its new system is effectively encouraging even higher price hikes than we had before.

"The regulator is flaccid... This should send a shiver through anyone who thought we'd seen the end of those incredibly annoying, frustrating, one of the biggest causes of complaint in my mailbag, problem; the mid-contract above-inflation price hike.

"In January, Ofcom, the regulator, launched new rules which were called 'pound and pence' consumer protection. Now, that was its solution to mid-contract price hikes.

"And what it says is when you sign up for a contract, at the start of the contract, you should be told in pounds and pence what the price rises during that contract would be are. So, you may be sign up for a mobile bill and it says it's currently £10 a month, but from April 2026 it will go up to £11.50, and then from April 2027 on a two-year contract, it'll go up to £13. That's how the system's supposed to work.

"What O2 has just done, which my big worry is will now start to become what all the firms do, is it said it was going to increase contracts by a set amount, £1.80 a month, and now it's increasing them by £2.50 a month – so by more than it told people when they signed up, which effectively is dancing away from the Ofcom consumer protection.

"Yes, it told people how much their pound and pence rise would be during the contract, but now it's increasing it by more, 40% more, than it said it would. And it can do this because it allows people to leave penalty-free.

"Now, as you mentioned, there are 15 million customers at O2, up to 15 million. We know the vast majority are just going to suck this up. They're just going to pay more. Which is why the entire way that Ofcom structured this consumer protection is effectively, well, this is making a mockery of it.

"It was never the way that I and many others thought it should be structured in the first place, which was simply saying you should ban above-inflation price hikes mid-contract – some say it should ban all price hikes mid-contract.

"And to put this in perspective, for those on the biggest tariffs with O2, because this is a flat amount, this is a rise of 7%. For those on the cheapest tariffs on O2, this is a rise of 30%. Inflation is 3.8%. This is inflationary in its own right. It's absolutely ridiculous.

"O2 should be hanging its head in shame, and I say most of its customers should be out there now, because you can leave penalty-free once you've been notified of this, checking if you can get a cheaper deal elsewhere.

"And Ofcom: when are you going to put some proper regulations in to protect consumers? This is absolutely outrageous. People were told when they signed up they would get a price hike, they were told the amount. And now their prices are being hiked more and the company can just shrug its shoulders and say 'yeah, you can leave penalty-free', but we know they won't."

Ed Balls, Good Morning Britain co-host: "Martin, I'm just going to put to you the statement that Ofcom have given us. Ofcom say: 'our new rules are all about protecting consumers from volatile inflation and making sure that they can shop around with confidence. Ofcom has never restricted how much providers can raise prices. That's because the UK has competitive telecoms markets.'

"But Ofcom, in an article on its website still from last summer, says, the regulator says it bans mid-contract price rises linked to inflation and is claiming to stamp out this practice.

"So are Ofcom banning mid-contract price rises? Are they stamping it out? And don't they have the power to act to stop this? Rather than saying in their statement to us it's not our thing to act on?"

Martin Lewis: "Well, that statement feels a bit like baloney, balderdash, or another B-word I can think of, frankly. Look, the truth here is Ofcom put this in and it wasn't what many of those of us who replied to its consultation at the time were saying it should do, because it said this is about transparency. Yes, they can put prices up mid-contract, but you will know in advance and that gives you consumer choice.

"Well, what O2 is doing now flies in the face of that because there is this opt-out that's always been, that companies don't have to follow the rules if they allow you to leave penalty-free.

"Now, Sky has sidestepped this from the start. It won't tell its customers the price rise when they sign up, but when it puts prices up, which it does most Aprils, it lets them leave penalty-free. What O2 is doing, it's a step beyond that."

Ed Balls: "But Martin, the regulator said on its own website, Ofcom says it is 'banning mid-contract price rises linked to inflation'. That is on the Ofcom website. Have Ofcom banned mid-contract price rises linked to inflation?"

Martin Lewis: "Yes, but it's nonsense. These are massively above inflation, what it's done is it said: 'you cannot put in your contract that in April we will increase prices by 3% above inflation'. But what you can do, like O2 is doing, is 'we're going to increase prices by a flat amount'. Originally its flat amount was £1.80. Now its flat amount is £2.50.

"£2.50, on a £10 a month contract is 25%. Inflation is 3.8%. So the key word ,the technical way it's getting away with saying that 'we've banned inflation-linked price hikes', is by 'linked'.

"But what we want it to ban is 'above-inflation' price hikes. And it has not banned above-inflation price hikes. In fact, its new system is effectively encouraging even higher price hikes than we had before.

"The regulator is flaccid. This new system brought in by O2 will likely open the doors for other mobile and broadband providers to do the same; let you sign up and tell you what the price hike you're going to get on sign-up.

"But then, when they decide later on, they can just up the price by far more than they said they were going to, and they can put in the letter, 'you've got 30 days to leave penalty-free', and we know that people don't churn, and many older and vulnerable people especially don't churn.

"And this is making a mockery of Ofcom's rules. Ofcom, I hope you're watching this. You've got it wrong. Your rules aren't tough enough. I know you're saying you want to help protect consumers, and I believe you do. Well, admit your mistake and tighten up the rules. This is not good enough."