Why can mobile phone companies write to our credit files without a court order?

[my-spirit-soars-free]

I can see why companies like credit cards, mortgages, bank accounts can update our credit files, they are all dealing with credit, and are all regulated by the FSA.

 

My paper shop can't, unless they get a court judgement confirming that I owe the money - it is a service contract, and they are not regulated by the FSA, so despite them giving me credit (I pay in arrears) the credit reference agencies would laugh in their faces if they tried to issue a late payment marker.

 

Why can the mobile phone companies write directly to our credit references? They keep telling us that they are not FSA regulated, as the contract is a service contract, not a credit agreement - but at the same time they treat it as a credit default when updating the credit reference agencies.

 

Surely there is something not right about this arrangement?

[MaxxPower]

The short answer is, Because you agree to let them when you take out the contract.

[sillygirl1]

The shorter answer is "Because they THINK they CAN"

 

All you have to do is get an e-petition up against Mobile Phone companies doing that and you would have the required amount of signatures in a couple of months.... these as you rightly say are NOT offering credit, and if you don't pay you get cut off, so there is no actual LOSS to the company if you don't pay your bill on time.

[my-spirit-soars-free]

If my paper shop changed their contract to include a clause to let them mark my credit record the credit reference companies would still laugh in their face, so that can't be the answer.

 

 

I like the idea of an e-petiton, as it feels wrong that private companies who are not regulated by the FSA should be able to do this.

[BRIGADIER2JCS]

The fact is this, anyone businesses, fianance/ credit companies

even sole traders, can subscribe to the CRAs and use the services

provided, so why should not a phone company check the credit

worthiness of a potential subscriber??

If you want a service involving ANY form of credit you must expect

credit checks, mobile phone contracts are probably the most abused

and misused service contracts in the UK.

If you want a pay monthly mobile phone service account you will

be checked it is not unfair or unreasonable, quite simply if your

''paper shop'' was a large enough business perhaps many branches

they may well decide that credit given on paper deliveries warrants

checking prospective clients.

If you don't pay the phone company you breach the contract and

if the company so wishes they can report the conduct of the account

on the CRAs.

[dallasg]

I read somewhere yesterday on this forum that telecomm providers, much like other utility providers, have agreements with various CRAs where they agree to:

 

1) Pay the fee to search individual credit files

2) To share up to date financial information from successful agreements with the CRAs so that credit files provide more accurate information of an individuals credit worthiness. (or something to that effect!)

[my-spirit-soars-free]

I was not querying mobile phone companies ability to check our credit records - just their ability to write their opinion of us on there - especially in view of the way they unilaterally change contracts. I am still trying to get an answer from O2, who have changed the contract, so I wish to terminate. They are not replying, but I have to keep paying as they will ruin my credit if I don't - without me having any chance to defend my actions in court, and without me being able to challenge their unfair change to the contract in court. If I keep paying, it will count against me, as then I have "accepted" their new contract.

 

The utilities are a little different - they are very much more regulated, for a start - and they don't post "late markers" if you miss a payment (at least, not any that I have ever forgotten to pay). The utilities also have rather better evidence of who you are, and where you live, as the service is provided to the address, and are less likely to have the wrong person, or the wrong address - all of which is easy with mobile phones.

 

I am currently wondering just how far mobile phone companies take their ability to ruin our credit - we had someone who was working here get his mobile phone delivered here - will they have linked his (abysmal) credit history with ours?

[BRIGADIER2JCS]

They are like any other sevice or credit provider

showing the conduct of accounts reasonable and fair.

[my-spirit-soars-free]

What other service provider can ruin your credit record without going through the courts?

 

The mobile phone provider is not providing credit, just charging (in advance) for a service. In that way, they are similar to insurance companies - and insurance companies do not ruin your credit if you stop paying, neither do they post "late markers", they just stop providing the service.

 

Of course the mobile phone companies argue that they are providing credit, that the mobile phone needs to be paid for over the duration of the contract - but then they also argue that they are not providing credit, so certainly should not be regulated in any way.

 

If they are providing credit, they should have the right to update credit files, but should also be regulated. If they are not providing credit, then they have no right to put markers on a credit file as they are not losing anything when we stop paying our contracts part way through - just like insurers.

[BRIGADIER2JCS]

Mobile phone accounts are as you say providing a service

if you enter into a contract for 1-2 years that requires a

payment of £xx per month which you fail to pay you

breach the terms of the financial contract, therefore

the creditor is entitled to register the conduct of the

account with the CRAs, insurers to provide credit when

you pay by installments, default on this particularly with

motor insurance a default will be placed immediately.

As to searces by phone providers I believe this quite fair

where you are provided with a high value phone for

the life of the contract, a company needs to know the

viability of the customer before providing the phone and service.

[my-spirit-soars-free]

Mobile phone accounts are as you say providing a service

if you enter into a contract for 1-2 years that requires a

payment of £xx per month which you fail to pay you

breach the terms of the financial contract, therefore

the creditor is entitled to register the conduct of the

account with the CRAs, insurers to provide credit when

you pay by installments, default on this particularly with

motor insurance a default will be placed immediately.

As to searces by phone providers I believe this quite fair

where you are provided with a high value phone for

the life of the contract, a company needs to know the

viability of the customer before providing the phone and service.

 

I am not discussing searches, I don't have an issue with those - just the way that the mobile phone companies ruin our credit files but putting markers on them in circumstances that the banks/credit companies would not be permitted to.

 

I also sign up for a 1 year insurance contract - but insurers don't say "pay up or we'll ruin your credit record" - they just cancel the insurance, and if they feel they are owed money they chase the debt through the courts, the proper way.

[BRIGADIER2JCS]

To be blunt here if you default on your mobile telephone

accounts terms and conditions then you must expect the

conduct of the account to be reported, the phone company

is not to blame or at fault if you breach the contract.

It is also a notice to other service providers that accounts

have not been managed within the terms of a contract.

[my-spirit-soars-free]

I am currently arguing with a mobile phone company.

 

They have changed the contract, taken away something important (to me) - the reason why I chose that mobile phone provider above the others.

 

It may be hidden in their small print that they can change the contract, but still make me pay for something that I no longer use - but I would prefer a court to decide whether that constitutes an unfair contract term, and whether I should be free to leave the contract without penalty as it is to my detriment.

 

If I carry on paying them, I am deemed to have indicated my acceptance of the new contract. If I do not, they will trash my credit history. My argument is that they should not be able to do this while the contract is under dispute - but as they are not regulated, they can, and do. It is purely their opinion - but it is being put onto the record as a matter of fact - and there seems to be nothing the average consumer can do.

 

I feel this is inherently unfair, I am stuck paying them for something I will no longer use - and I will have to pay someone else for the service I want.

 

I will never again go for a contract after this - I went for a contract as I was petrified of breaking down, and being out of credit while holding on for hours for the recovery services (I am in a wheelchair, so breaking down leaves me utterly stranded). I did not realise that the mobile phone companies could change the terms of the contract part way through, and I was certainly not told that when signing up for a lengthy time.

 

Again, what other service provider feels it is OK to remove part of the service during the duration of the contract?

 

Would we accept an insurance company saying, half way through a years car insurance, "we have decided to remove theft cover but you have to keep paying us for the rest of the contract, otherwise we will trash your credit history"?

[BRIGADIER2JCS]

You need to start a properly organised Formal Complaint to the

company concerned.

Only this way can you exhaust their complaints procedure and

achieve a final response from them after which you can make

a proper complaint to the various regulators such as the OFT

and Offcom.

It would be my opinion on the information so far that you would

loose any proposed court claim.

[my-spirit-soars-free]

I possibly would lose a court action - but that does not alter the fact that no company should be able to trash a credit file while the account is in dispute - and that currently, the mobile phone companies claim that they are giving us a handset on credit, and we need to repay them - but they are not giving us any credit, and therefore don't need to be regulated in any way.

 

As for trying to get a formal complaint going - I am trying.

[BRIGADIER2JCS]

It is indeed a form of credit monthly

payments as laid down in the contract

and terms and coditions of that acknowledged

by the person signing it.

''Trashing'' of credit files really is not the case

if the contract is breached it will be reported

as a true reflection of the conduct of the account.

You need to very careful that you get the facts exactly

right for this complaint making rash statement about

''trashing'' credit files are no going to help you.

[my-spirit-soars-free]

If it is a form of credit, why are the mobile phone companies not regulated by the FSA?

[BRIGADIER2JCS]

Why aren't all utility and service companies???

[my-spirit-soars-free]

Utility companies don't give you an expensive handset, then recover the cost.

 

Neither do other service companies, as far as I know?

[BRIGADIER2JCS]

You rent your household meters and pay monthly/quarterly in arrears!!!!

I use the the CRAs and report to them bt I don't give credit.

[Human Writes]

Mobile phone contracts and other utility contracts are not credit, they are service agreements they allow you to access a service in exchange for money.

 

Put simply credit agreements are lending money, in return the lender gets the money back plus interest, they are two different things.

 

Credit agreements are regulated under the CCA, service agreements are not regulated by a specific act but they are subject to consumer legislation.

[BRIGADIER2JCS]

Agreed, and the service providers quite rightly

search cra files and report the conduct of the

accounts to protect themselves, phone contracts

are widely abused!!

[my-spirit-soars-free]

OK - having contacted the Office of Fair Trading, the utilities do not have to be creditregistered as they are specifically exempt under the legislation.

 

Mobile phone companies are not exempt, they say, so I was told to look up their licence number on the website and report them if I was unhappy about how they were doing business.

 

 

I can't find a registration for a mobile phone company, so I have contacted the Office of Fair Trading again, pointing out that they are not registered, and that any contract that hands you a £700 item at the start is effectively a credit contract (IMO).

 

However, by their reply I get the impression that they will only police the contract if the company chooses to register - so I have also asked them who is responsible for ensuring that companies do register when they need to.

[2Grumpy]

Is everything paid in arrears or is line rental in advance & usage exceeding whatever is bundled in that billed in arrears?

 

(And does that make any difference)

[my-spirit-soars-free]

I feel that their "service contracts" are in fact credit agreements. They actually say that their SIM only plans are cheaper because they don't need to recover the cost of the handset - and when you consider that a top of the range smartphone can now be worth £700 that is a lot. Their business model is to provide the item, then "rent to own" - like Brighthouse, and Brighthouse do need to be registered.

 

Any usage in excess of the monthly allowance is collected in arrears, and my first months charge was higher than normal, so I am assuming that the monthly payment is in advance.