ClickAJob News

Telecoms regulator Ofcom has launched a probe into mobile retailer Phones4U into claims of phone deal mis-selling.

Ofcom has received hundreds of complaints about what consumers claim are poor selling practices after a voluntary code failed to bring action.

Problems to be investigated – following complaints from across the sector - include the selling of contracts supposed to cost a set amount but actually costing more, and cashback deals set with strict term and conditions.

Other areas of the probe include the offering of free handset upgrades that actually end up costing extra.

If Ofcom finds Phones4U has failed it could get legally binding agreements from the firm to make changes.

In March, the regulator said it would be cracking down on the sector, after a voluntary code introduced last summer did not bring change.

An Ofcom spokesperson said: "The voluntary code failed to work.

"We are proposing to bring in new regulations to fine firms."

The regulator is now looking at bringing in powers in the autumn to fine firms up to ten per cent of their profits for failures and put further pressure on mobile phone operators and retailers.

Phones4U is now cooperating with the investigation.

A spokesman said: "Phones 4u confirms that it has received notice from Ofcom that they are launching an enquiry into some aspects of the business.

"Phones4U prides itself in maintaining the highest standards of customer service. If any instances where this has not been the case are brought to light, as a result of this enquiry, we will act accordingly."

Last summer, Ofcom sent out the clear message to the mobile phone sector that if it did not "clean up its act", Ofcom would introduce mandatory rules.

Mobile phone operators signed up to a voluntary industry code – but Ofcom warns with an average of 700 complaints a month more needs to be done, so it is pushing for greater powers to protect consumers.

Ofcom chief executive Ed Richards said in March: "The UK has one of the more competitive mobile phone sectors in the world. But strong competition is no excuse for marketing malpractice.

"We warned the industry last year that unless it cleaned up its act we would consider introducing new rules. The facts show that this hasn’t happened, so we are now proposing tougher measures to protect consumers from unacceptable sales and marketing practices."