UK’s largest mobile firms sued for £3bn – amid claims they overcharged loyal customers
Vodafone, EE, Three and O2 are facing a “£3bn-plus” class action claim that alleges they used their market dominance to overcharge on up to 28.2 million UK mobile phone contracts.
The four largest network operators are accused of penalising loyal customers – meaning they paid more than new customers for the same services.
Many contracts involve gradually repaying the cost of a smartphone over a two or three-year period – but it is alleged that, when the device was paid off, firms failed to reduce the monthly bill.
The legal action has been brought by former Citizens Advice executive Justin Gutmann and the law firm Charles Lyndon, and they are seeking damages of at least £3.285bn.
If successful, affected consumers could receive as much as £1,823 each, Mr Gutmann claimed.
The class action has been filed with the Competition Appeal Tribunal in London.
All qualifying consumers will be automatically included in the claim for free unless they follow specific steps to opt out.
The claim follows a “super complaint” from Citizens Advice to the Competition and Markets Authority (CMA) in September 2018, which resulted in the CMA finding: “We do not consider that providers should continue to charge customers the same rate once they have effectively paid off their handsets at the end of the minimum contract period.
“This is unfair and must be stopped.”
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Mr Gutmann said: “I’m launching this class action because I believe these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties, taking over £3bn out of the pockets of hard-working people and their families.
“These companies kept taking advantage of customers despite the financial crisis of 2008, COVID and now the cost of living crisis. It’s time they were held to account.”
An O2 spokesman said: “To date there has been no contact with our legal team on this claim. However, we are proud to have been the first provider to have launched split contracts a decade ago which automatically and fully reduce customers’ bills once they’ve paid off their handset.
“We’ve long been calling for an end to the ‘smartphone swindle’ and for other mobile operators to stop the pernicious practice of charging their customers for phones they already own.”
An EE spokeswoman said: “We strongly disagree with the speculative claim being brought against us. EE offers a range of tariffs and a robust process for dealing with end of contract notifications.
“The UK mobile market is highly competitive space with some of the lowest pricing across Europe.”
Vodafone said: “This has just been brought to our attention and we don’t yet have sufficient detail for our legal team to assess.”
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You probably recall the stories about Leicester’s clothing industry in recent years: grim labour conditions, pay below the minimum wage, “dark factories” serving the fast fashion sector. What is less well known is what happened next. In short, the industry has cratered.
In the wake of the recurrent scandals over “sweatshop” conditions in Leicester, the majority of major brands have now abandoned the city, triggering an implosion in production in the place that once boasted that it “clothed the world”.
And now Leicester faces a further existential double-threat: competition from Chinese companies like Shein and Temu, and the impending arrival of cheap imports from India, following the recent trade deal signed with the UK. Many worry it could spell an end for the city’s fashion business altogether.
Gauging the scale of the recent collapse is challenging because many of the textile and apparel factories in Leicester are small operations that can start up and shut down rapidly, but according to data provided to Sky News by SP&KO, a consultancy founded by fashion sector veterans Kathy O’Driscoll and Simon Platts, the number has fallen from 1,500 in 2017 to just 96 this year. This 94% collapse comes amid growing concerns that British clothes-making more broadly is facing an existential crisis.
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In an in-depth investigation carried out over recent months, Sky News has visited sites in the city shut down in the face of a collapse of demand. Thousands of fashion workers are understood to have lost their jobs. Many factories lie empty, their machines gathering dust.
The vast majority of high street and fast fashion brands that once sourced their clothes in Leicester have now shifted their supply chains to North Africa and South Asia.
And a new report from UKFT – Britain’s fashion and textiles lobby group – has found that a staggering 95% of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK. Some 58% of brands, by turnover, now have an explicit policy not to source clothes from the UK.
Seamstresses in one of the city’s former factories
Clothing industry workers in Leicester
Jenny Holloway, chair of the Apparel & Textile Manufacturers Association, said: “We know of factories that were asked to become a potential supplier [to high street brands], got so far down the line, invested on sampling, invested time and money, policies, and then it’s like: ‘oh, sorry, we can’t use you, because Leicester is embargoed.'”
Tejas Shah, a third-generation manufacturer whose family company Shahtex used to make materials for Marks & Spencer, said: “I’ve spoken to brands in the past who, if I moved my factory 15 miles north into Loughborough, would be happy to work with me. But because I have an LE1, LE4 postcode, they don’t want to work for me.”
Shahtex in Leicester used to make materials for Marks & Spencer
Tejas Shah, of Leicester-based firm Shahtex
Threat of Chinese brands Shein and Temu
That pain has been exacerbated by a new phenomenon: the rise of Chinese fast fashion brands Shein and Temu.
They offer consumers ultra-cheap clothes and goods, made in Chinese factories and flown direct to UK households. And, thanks to a customs loophole known as “de minimis”, those goods don’t even incur tariffs when they arrive in the country.
An online advert for Chinese fast fashion company Shein
According to Satvir Singh, who runs Our Fashion, one of the last remaining knitwear producers in the city, this threat could prove the final straw for Leicester’s garments sector.
“It is having an impact on our production – and I think the whole retail sector, at least for clothing, are feeling that pinch.”
Inside one of the city’s remaining clothesmakers
While Donald Trump has threatened to abolish the loophole in the US, the UK has only announced a review with no timeline.
“If we look at what Trump’s done, he’s just thinking more about his local economy because he can see the long-term effects,” said Mr Singh. “I think [abolishing de minimis exceptions] will make a huge difference. I think ultimately it’s about a level playing field.”
A spokesperson for Temu told Sky News: “We welcome UK manufacturers and businesses to explore a low-cost way to grow with us. By the end of 2025, we expect half our UK sales to come from local sellers and local warehouses.”
Thames Water, the UK’s biggest water provider, has been hit by a record fine by regulator Ofwat.
The company has been fined £122.7m following Ofwat’s “biggest and most complex” investigation.
It follows two investigations related to Thames Water’s wastewater operations and dividend payouts.
Of the total fine, £104.5m – 9% of Thames Water‘s turnover – has been levied for breaches of wastewater rules – just below the maximum 10% of turnover that Ofwat could have applied.
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Pic: istock
Another £18.2m penalty will be paid for breaches of dividend payment rules.
It is the first time Ofwat has fined a company for shareholders’ payments which do not “properly reflect” its performance for customers and the environment.
The fine will be paid by Thames Water and its shareholders, Ofwat said, rather than customers.
‘Unacceptable’ environmental impact
The regulator was highly critical of Thames Water’s handling of wastewater, describing it as having an “unacceptable” impact on the environment.
Its investigation of treatment works and the wider wastewater network uncovered failings which “amounted to a significant breach of the company’s legal obligations” and caused that unacceptable environmental impact.
The company announced a 40% spike in sewage spills in December for the period from January to September 2024.
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Thames Water boss can ‘save’ company
The fine was so large because Ofwat’s chief executive, David Black, said Thames Water “failed to come up with an acceptable redress package that would have benefited the environment”.
“This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment,” Mr Black said.
“Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.”
As a result, Thames Water is required to agree to a remediation plan with Ofwat within six months.
Another investigation by the Environment Agency into environmental permits at sewage treatment works is ongoing.
Bad news for Thames Water finances
Thames Water serves 16 million customers across London and the South East and has just about fended off effective nationalisation, having secured an emergency £3bn loan. Its debts now top £19bn.
These fines were not factored into Thames Water’s financial planning for the next five years. The company’s chief executive, Chris Weston, told a recent sitting of the Environment, Food and Rural Affairs select committee that Thames Water’s future was dependent on Ofwat being lenient with fines.
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A Thames Water spokesperson said: “We take our responsibility towards the environment very seriously and note that Ofwat acknowledges we have already made progress to address issues raised in the investigation relating to storm overflows.
“The dividends were declared following a consideration of the company’s legal and regulatory obligations. Our lenders continue to support our liquidity position and our equity raise process continues.”
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