Martin Lewis writes to Rachel Reeves: Act now on Ofcom’s flawed ban on mid-contract price hikes

Martin Lewis, founder of MoneySavingExpert.com, has written to the Chancellor of the Exchequer, Rachel Reeves, urging her to strengthen Ofcom’s rules over unannounced mid-contract price hikes for mobile, broadband and pay-TV providers. This comes after O2 recently announced up to 15 million mobile customers will see their monthly bills rise by 40% more than it told them when they signed up.

Ahead of the Budget, Martin says that O2’s move "makes a mockery" of Ofcom’s new 'pounds and pence' consumer protection regime. He warns that these practices risk driving inflationary pressure to the economy, and it could snowball if other telecom providers follow suit.

The letter sent today, Thursday 30 October 2025, from Martin Lewis, in full, says:

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