Huge fine for Vodafone over billing and complaints handling – check your bill NOW for errors

The fine – the largest handed to a telecoms operator to date – is for two separate issues:

• £3.7m fine for PAYG billing. Ofcom found that between Dec 2013 and Apr 2015, Vodafone failed to credit the accounts of some 10,452 PAYG customers after they paid to top up. The regulator said Vodafone did not act quickly enough to identify or address the issue, which stemmed from it moving to a new billing system.

• £925,000 fine for poor complaints handling. A separate investigation by Ofcom looking at the period from 1 Jan 2014 to 5 Nov 2015 concluded Vodafone had failed to comply with Ofcom rules on handling complaints. Customer service agents were not given sufficiently clear guidance on what constituted a complaint, and the firm's processes were "insufficient to ensure that all complaints were appropriately escalated or dealt with in a fair, timely manner".

Yet the problems at Vodafone are much deeper

Back in June this year our investigation uncovered a huge number of problems with billing, incorrect tariffs, customer service and other issues, with a big spike since a move to a new billing system in 2015. Since then we've been warning all Vodafone customers to check their bills for errors – see full help in our Vodafone Warning guide.

Check your bills now

MoneySavingExpert.com founder Martin Lewis says: "In June I gave a clarion call that every Vodafone customer should check their bills and bank statements – and if they're wrong, their credit reference files too – after warning them of the systemic errors by this, the UK's biggest mobile provider.

"The thousands of complaints already received about Vodafone are likely to be a drop in the ocean compared with the amount of people likely affected, as most people don't rigorously check their bills or tariffs. This is once again shining a light on the huge problems of this powerful brand.

"It's pleasing to see that the regulator has caught up, however, that doesn't change the fact that Vodafone has been mischarging substantial numbers of customers.

"This fine isn't enough. Actually, the real cost to Vodafone will be fixing the tens of thousands more bills that are wrong and potential ensuing credit score problems. This is a crucial reminder if you're a Vodafone customer that your bills might be wrong."

How did PAYG customers end up paying money for nothing?

Vodafone disconnects inactive PAYG accounts after a certain period of time and recycles the numbers, which is a common practice in the mobile phone industry.

Where a PAYG phone has not been used or 'topped-up' for 270 consecutive days, Vodafone puts the customer's SIM card into a 'pre-disconnection state' for up to 24 hours, before disconnecting it from its network. During this period, customers should not be able to make calls or top-up their accounts.However, Vodafone had problems transferring customer accounts to its new billing system, and so stopped disconnecting inactive SIMs from its network. Consequently, they remained in a 'pre-disconnection state' for significantly longer than 24 hours.

Customers were able to pay for top-ups at cash machines and via other electronic methods during this period, when they shouldn't have been able to – and no credit went on their account.

Will affected customers get any compensation?

Ofcom has confirmed that the £4.6 million fine – which must be paid to the regulator within 20 working days – will be passed on to HM Treasury, rather than any of it finding its way back into the pockets of those who initially lost out.

Vodafone, which has admitted the breaches, has reimbursed the vast majority of its PAYG customers who were left out of pocket as a result of the PAYG billing mishap. The average refund per customer was £14.35.

However, the company could not identify 30 of the affected customers and so has made a donation of £100,000 to charity.

10,452 PAYG customers lost out to the tune of £150,000 when top-up payments weren't credited to accounts

What does Ofcom say?

Lindsey Fussell, Ofcom consumer group director, says: "Vodafone's failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies. Phone services are a vital part of people's lives, and we expect all customers to be treated fairly and in good faith. We will not hesitate to investigate and fine those who break the rules."

What does Vodafone say? A company statement read: "We deeply regret these system and process failures. We are completely focused on serving our customers: everyone who works for us is expected to do their utmost to meet our customers' needs, day after day, and act quickly and efficiently if something goes wrong.

"It is clear from Ofcom's findings that we did not do that often enough or well enough on a number of occasions. We offer our profound apologies to anyone affected by these errors."

What should I do if I'm a Vodafone customer?

Given the scale of the problems reported, we believe that all of Vodafone's nearly 20 million customers should do the following:

1. Check your Vodafone bill – it may be wrong. In particular, make sure you're on the right tariff, check you're getting bills as expected and look for incorrect charges.

2. Even if your bill's correct, check your bank statements too – some have found the wrong amount's been taken. In particular, check if payment's actually being taken through your direct debits, make sure you're not being double- or triple-charged, and if you've cancelled, check you're not still paying.

3. Found a problem? Check your credit score too. We've heard of a number cases where a mistake on Vodafone's part has led to credit agencies and debt collectors getting involved – meaning credit scores are damaged as a result.

For full help, including what to do if you've found a problem, see our Vodafone Warning guide.