Ofcom has hit O2 with a £10.5m fine after it was found to have overcharged thousands of customers that were trying to leave the mobile phone company over the past decade.
The telecoms regulator found that O2 had miscalculated charges for departing customers, meaning that 140,000 people paid incorrect fees amounting to £2.4m of overpayments between 2011 and 2019.
The potential damage to consumers could have been much higher as an aggregate 250,000 customers were incorrectly billed by a total of £40.7m. This figure included people who chose not to pay the sum demanded.
“This a serious breach of our rules and this fine is a reminder that we will step in if we see companies failing to protect their customers,” said Gaucho Rasmussen, Ofcom’s enforcement director.
O2 said that about half of the customers that were hit by the double charging were refunded automatically or when they complained. The rest were paid back in 2019 and 2020 after the Telefónica-owned mobile network identified the issue.
The large fine will send a signal to the telecoms industry that Ofcom is clamping down on continued poor customer service in the sector. It is more than double what Vodafone had to pay in 2016 after it was accused of “mis-selling, inaccurate billing and poor complaints handling procedures”.
The O2 fine comes as competition regulators weigh up its proposed merger with cable broadband provider Virgin Media.
O2 said on Friday: “We are disappointed by this technical error and sincerely apologise to customers . . . As Ofcom have stated today, the vast majority of funds reported were not overpaid. Only 6 per cent — £2.4m — relates to money that was overpaid by customers.”
The size of the penalty was reduced from a potential £15m due to O2’s co-operation but was still a shock to the company which had self-reported the matter to the British Approvals Board for Telecommunications, the auditor for the sector.
“We identified the issue ourselves and notified our industry billing auditor. We have also taken proactive steps to refund all impacted customers for the extra charges they paid, plus an additional 4 per cent,” O2 added.
The heft of the fine reflected the length of time it took O2 to identify the problem and the lack of governance processes at the company to avert such issues.
BT received the largest fine ever levied by Ofcom on a telecoms group in 2017 but the sanction was not related to its consumer services. The company was hit with a £42m penalty and was told to pay £300m back to other telecoms companies after the regulator found it had abused its market position.
