How to escape your contract early without paying the price

Fines levied against EE and Virgin Media prompt fears among millions locked into service contracts

Virgin Media overcharged customers who wanted to escape their contracts early (Reuters)

Last week Ofcom announced it had fined two major mobile and broadband providers a combined £13.3m for misleading consumers over exit fees.

Virgin Media and EE were made to pay the sum after overcharging customers who wanted to leave their contracts early.

Such substantial fines may warn telecoms businesses against charging more than agreed without the watchdog stepping in. But consumers might not be convinced that they can switch contracts without facing unfair penalties.

So what are your rights if you want to escape a contract early, whether that’s broadband, mobile, utilities or even a gym? Is it ever possible to ditch a deal once you’ve signed up without paying substantial fees?

Rights and responsibilities

Customers do have rights to row back on contracts immediately after signing up. Stewart Croft, solicitor at QualitySolicitors AcklamBond, says: “Sometimes our plans for the gym can be a little too ambitious, which is why we can be thankful that all contracts entered into over the phone, online or at your home can be cancelled within a cooling off period of 14 days.

“After this cooling off period, it can be difficult to terminate a contract early unless a certain exemption applies.”

Those exemptions may include if the terms of the contract are considered unfair or if the service or product was mis-sold. But it could also be that the terms and conditions have changed.

But that relies on you noticing the change in time. Take broadband contracts, for example. Vix Leyton, from broadbandchoices.co.uk, says: “If you have a price rise that is above inflation and not within the terms of your agreement then you can typically exit without penalty, but to do this then you must pay attention to your post.

“They will notify you and give you a time period to switch, make sure you use that time effectively to shop around and vote with your feet.

“If with broadband, or any contract, the reason you are leaving is because you’re unhappy with the service then the first step is to talk to the provider. Lay out your problem rationally and follow the procedure they set out to you. If you follow these rules and are still unsatisfied with the outcome then you can open a conversation about leaving and negotiate terms. But give them the chance to rectify it – if it’s rectifiable.”

Keep talking

There’s not always legal recourse to escape a contract, so what if you need to leave because of a change in your personal circumstances?

Leyton says: “It is worth picking up the phone and having a conversation as you may be able to negotiate on a buy-out or move to a lower price package.”

It’s also essential to remain calm. Croft says: “Telephone the business to express your concern and ask what would be required to terminate the contract. Remember that this is a first conversation and, despite any existing reasons you may have to want to terminate, you should remain amicable. The cancellation team will usually ask why you wish to cancel and, more often than not, they will offer a cheaper or alternative package that might better suit your needs.

If you believe the cancellation terms are unfair or the charges excessive, you should write to the business, set out your detailed reasons for wanting to cancel the contract and make it clear that you will refer the dispute to trading standards if required.

“You should keep records of all correspondence as this may be necessary if you cannot come to an agreement. If you’re unsure about your consumer and contractual rights, you can also seek legal advice to find out what options may be available to you.”

Jonathan Compton, partner at city law firm DMH Stallard, says: “If there is a service failure on the part of the provider then complain and keep escalating the complaint.”

“If the service failure is serious and continues for a long period of time, the consumer may have a right to terminate the contract ‘for cause’. If there is no service failure, then read the contract you entered into and there may be a contractual right to terminate early.

“If there is no contractual right to terminate or this right is limited then consult a lawyer as there are legal provisions preventing unfair terms in consumer contracts.

“Whatever you do, do not just stop paying the bills. You will be on the wrong foot when dealing with the provider or the court. If all else fails, get in contact with the provider and cut a deal.”

Vix Leyton agrees: “Whatever you’re trying to exit, do not be tempted to just cancel your direct debits and hope for the best, this may end up resulting in collection agencies further down the line and damage to your credit rating. Have the conversation.”

To borrow from another telecoms business – it’s good to talk. Because then you can negotiate.