Ofcom is to clamp down on “hidden” charges levied by mobile phone and broadband companies amid fears that consumers are being misled.

The telecoms watchdog has recorded a surge in complaints from customers angered by unexpected charges levied for itemised bills, non-direct-debit payment and premium-rate technical helplines.

Early next year Ofcom will launch a consultation document about the charges, which can increase monthly bills dramatically. It wants to establish whether they are “fair, transparent and justified”.

Fierce competition for mobile and broadband customers has forced operators to cut prices over recent years. A study by Ofcom found that families in Britain enjoyed some of the lowest prices for telephone, broadband and television in Europe. The battle has led some operators, including Carphone Warehouse, to offer “free” broadband to customers who sign up to certain calls packages.

Steve Weller, of USwitch, a price comparison service, said: “All these companies are competing on headline prices and are bringing those down. But they are then having to recoup their costs via other ways.”

Orange, the mobile phone company, charges customers £1.50 each month on top of their rental and call costs to receive an itemised paper bill. Some customers have also been surprised to discover that a claim on their mobile phone insurance with Orange will result in a £15 administration charge.

Despite frequent complaints about poor customer service, many companies also levy charges to fix problems. Last summer, Virgin Media switched its broadband technical helpline to a premium-rate number charging 25p a minute. It claims that this was necessary to deter customers from calling about non-broadband issues.

Penalties for payment by means other than direct debit are also common. Orange charges an “administration” fee of £3.50 a month for each phone on an account not paid by direct debit, Virgin Media charges £5 a month. BT has a fee of £4.50 per quarter. BT introduced the charge in July because “some payment methods are more costly to process than others”. Most mobile companies also penalise customers who wish to be released early from 12-or 18-month contracts. Typically, they must pay the full monthly rental due for the remainder of the contract. Late payment of a bill and having a service restored when it has been suspended after late payment can also trigger a charge.

Mr Weller said that customers could be caught out because the “stealth” charges often are not levied for the first three months of a contract. The fees appear on a bill only in the fourth month, when customers may have stopped scrutinising their bill.

Ed Richards, head of Ofcom, said: “Consumers of communications services see headline prices fall, but they must not be misled . . . they need confidence that any additional charges are fair, transparent and justified.”

Withheld numbers
The hidden charge checklist

- Not paying by direct debit
- Itemised paper bill
- Premium-rate technical helplines
- Early termination of contract
- Late payment of bill
- Having service restored after it has been suspended after late payment
- “Administration” fees for insurance claims

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