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.
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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.
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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.”
Tens of thousands of Vodafone users are reporting problems with their internet
The outages began on Monday afternoon, according to the monitoring website DownDetector, which reported more than 130,000 issues with Vodafone connections.
A spokeswoman for the company said: “We are aware of a major issue on our network currently affecting broadband, 4G and 5G services.
“We appreciate our customers’ patience while we work to resolve this as soon as possible.”
The company has more than 18 million UK customers, with nearly 700,000 of those using Vodafone’s home broadband connection.
Vodafone users vented their frustration on social media.
“It’s like Vodafone has just been wiped off the earth. Not a single thing works,” said one X user.
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Image: Vodafone users were shown an error message when trying to access the internet provider’s app
The Vodafone app also appeared to be down for users, with the company’s website briefly going down too.
The ‘network status checker’ on the website was also down, and when Sky News tried to test the customer helpline, it did not ring.
“There’s Vodafone down and then there’s Vodafone wiped off the face of the f***ing planet,” posted another X user.
Jake Moore, global cybersecurity advisor at ESET, said the outage shows how reliant we are on modern infrastructure like mobile networks.
“Outages will always naturally raise early suspicions of a potential cyber incident, though current evidence points more towards an internal network failure than a confirmed attack,” said Mr Moore.
“The sudden outage, combined with the inability to access customer service lines, mirrors classic symptoms of a distributed denial-of-service (DDoS) attack, where attackers overwhelm the network so the site or systems collapse.
“However, malicious or not, this once again highlights our heavy reliance on digital infrastructure, especially in an age where we increasingly depend on mobile networks for everything,” he said.
“Ultimately, resilience is essential, whether the cause is a direct cyberattack, a supply chain issue or a critical internal error.”
Lloyds Banking Group has set aside a further £800m to cover estimated costs associated with the car finance mis-selling scandal.
The bank said the sum took its total provision to £1.95bn.
It had been assessing the impact since the Financial Conduct Authority (FCA) revealed last week it was consulting on a compensation scheme, with up to 14.2 million car finance agreements potentially eligible for payouts.
The regulator had previously found that many lenders failed to disclose commission paid to brokers, which could have led to customers paying more than they should have between April 2007 and November 2024.
Eligible customers could receive an average of £700 each under the proposals.
Lloyds said on Monday that it would be contributing to the consultation to argue a number of points.
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It said: “The Group remains committed to ensuring customers receive appropriate redress where they suffered loss, however the Group does not believe that the proposed redress methodology outlined in the consultation document reflects the actual loss to the customer. Nor does it meet the objective of ensuring that consumers are compensated proportionately and reasonably where harm has been demonstrated.
“In addition, the approach to unfairness in the redress scheme does not align with the legal clarity provided by the recent Supreme Court judgment in Johnson, in which unfairness was assessed on a fact specific basis and against a non-exhaustive list of multiple factors. The Group will make representations to the FCA accordingly.”
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Shares in Lloyds, which fell last week when the bank warned of a potential “material” increase in its provisions, gained more than 0.5% on Monday.
The estimated compensation figure came in below the sum some financial analysts had predicted.
The shares remain more 50% up in the year to date.
Another listed lender exposed to car loan mis-selling is also expected to raise the amount it has set aside.
Close Brothers, which has a £165m provision currently, saw its shares tumble 7% when it admitted an increase was likely once its analysis of the compensation consultation documents was completed.
Car finance makes up approximately a quarter of its total loan book.
The budget may still be more than six weeks away, but rumours of U-turns and changes are already in full swing.
Over the last few days, there have been multiple reports that those inside Whitehall are considering tweaks to the controversial inheritance tax (IHT) reforms on farms announced this time last year.
Plans to introduce a 20% tax on estates worth more than £1m drew tens of thousands to protest in London, many fearing huge tax bills that would force small farms to sell up for good.
Now there are reports the tax threshold could be increased from £1m to £5m (£10m for a married couple) – a shift that would remove smaller farms from being liable to pay.
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Senior figures in farming have long believed a rise could be the solution to save the smaller farms and it would satisfy most.
However under the proposals, the 50% relief on IHT would be removed for farms above the new threshold.
That means bigger farms, responsible for producing a large amount of produce in our supermarkets, could bear the brunt of the tax burden with the Treasury potentially increasing revenues.
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Two senior farming figures told me today that while a threshold increase is welcome, it does nothing to solve an “insolvable” problem.
Big farms have more land to sell, but then they become smaller farms and either produce less, or even divide up, to avoid the tax entirely.
Richard Cornock runs a small dairy farm in south Gloucestershire, which has been in his family since 1822.
Image: Richard Cornock plans to pass his farm on to his son
He hopes to pass it on to his son Harry, who is now 14 and training to become a farm manager.
“I’ve been under so much stress like most farmers worrying about this tax,” he said. “And I really hope they do push the boundaries on the thresholds, because the million pounds they propose at the moment is ridiculous.
“It’s been on my mind the whole time to be honest. I even looked into getting life insurance to insure my life and I can’t get it because I had a heart condition. And that was one way I thought I might be able to cover my kids…”
We paused our chat as he was too upset to continue – an illustration of the stress farmers like him have been under over the last 12 months.
Image: Tens of thousands from the farming community took part in protests in London. Pic: Reuters
The government says it won’t comment on “speculation” about any possible changes, but it has previously defended the IHT reform, saying most estates would not pay and that those who will be liable can spread payments over a decade.
Labour is under pressure to do something to appease the angry farmers, a rural vote that turned from the Conservatives at the last election.
I ask Richard whether any tweak or row back on IHT will restore faith in Labour?