DRN-6250450

1 DRN-6250450 The complaint Miss P says Telefonica UK Limited trading as O2 mis-sold her a fixed sum loan agreement for a mobile phone and incorrectly passed her account to a debt collection agent. What happened The parties are familiar with the background details of this complaint – so, I’ll only summarise them here. It reflects my role of resolving disputes quickly and with minimal formality. In March 2024, Miss P bought a new phone online from O2. She paid for the phone with a fixed sum loan agreement (known as the device plan) and also signed up for an airtime contract for data and minutes. In June 2024, O2 wrote to Miss P, saying it had terminated her device plan and airtime contract because she was in arrears. Miss P called O2 and said she needed support, because she is autistic. She said she needed information about her bills in writing so her carer could help her with them. So, O2 registered Miss P with its support team. In July 2024, Miss P and her representative contacted the support team as they had concerns about the device plan O2 had sold Miss P. They said: • O2 mis-sold the contract because it hadn’t identified Miss P was autistic and might not understand what she was agreeing to. • O2 used the term “spend cap” which was misleading. Miss P says she thought the “spend cap” she chose for her new contract meant her payments would never go above the limit she set. She didn’t know there were separate payments for the device plan and exceptions to the cap, like movie downloads. • Miss P couldn’t cope with calling O2’s support team because the hold music triggered her audio sensitivity. She said O2 should allow customers to turn off the music. • O2 asked Miss P to provide her medical history which included details she didn’t want to disclose to O2. Miss P said she was worried about how O2 would handle her sensitive personal data. • O2 ignored her complaints and didn’t respond to them. O2 reviewed the complaint. It said it would cancel the debt, of around £260, if Miss P returned the phone. O2 also said it would refund the payments Miss P had made so far and remove the default marker from her credit report. O2 received the phone back at the end of August 2024 and told Miss P it would end the device plan with nothing more to pay. In November 2024, Miss P was contacted by a debt collection agent, L, who said the debt on the device plan had been sent to them. Miss P’s representative complained to O2 again, saying: • There wasn’t a debt anymore because O2 had agreed to waive it, so it shouldn’t have

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2 been sent to L. • The contact from L caused Miss P to have panic attacks and made her very unwell. O2 didn’t provide a written response within the timeframe allowed, so Miss P brought her complaint to our service. After we received the complaint, O2 accepted it had taken too long to end the agreement and clear the balance. It offered to pay £100 to compensate Miss P and said it would clear the balance and remove the default from Miss P’s credit report. Miss P didn’t think this offer was enough to resolve things. She said O2 was supposed to have cancelled the debt, so it was wrong to send the account to L at all. Miss P said this meant she was unfairly harassed, and as she is disabled it affected her a lot. Our Investigator looked at Miss P’s complaint: • She didn’t think she could comment on O2’s hold music or the terms it used to describe the spending limits, because these were commercial decisions made by O2. • She thought O2 had passed the debt to L incorrectly and it took too long to waive the balance and end the agreement once the phone was returned. • She understood why O2 wanted to know more about Miss P’s health before deciding to cancel the money she owed. • She thought O2 hadn’t fully understood how this affected Miss P, and it should pay her a total of £400 to put things right. • She also thought O2 should remove any adverse information from Miss P’s credit report. Miss P accepted the Investigator’s opinion, but O2 didn’t. In response, O2 said: • It offers several ways for customers to get in touch, and it thought it had done enough to support Miss P when she said she was vulnerable. • It clearly explains the “spend cap” on its website and there is a responsibility for customers to only agree to the contracts if they understand them. • O2 passed the debt to L before Miss P sent the phone back, so it had followed the process correctly. But it agreed it should have recalled the account faster and cleared the arrears on receipt of the phone. • O2 said it was sorry for the upset caused, but it didn’t think it ought to do more than pay £100 compensation. It also didn’t think it was reasonable to remove the adverse information as it said Miss P hadn’t made payments towards the device plan. O2 asked for a final decision on the complaint. So, the complaint has now been passed to me.

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3 What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I agree with the outcome reached by the Investigator – and I’ll explain why. Miss P took out a fixed sum loan agreement to pay for the phone, which is a type of consumer credit agreement. So, our service can consider complaints relating to the finance agreement and the way it was sold. Our service can’t consider a complaint about the airtime contract, so I can’t comment on anything solely relating to the airtime contract. But I’ve mentioned the contract to add context to the background of the complaint. Both Miss P and O2 have raised a lot of points for the complaint. As my role is to resolve complaints with minimal formality, I’ve thought about everything overall, rather than look at one point at a time. I’ve explained my thoughts in three parts, covering the key points in the complaint. Customer support I’ve thought about the support O2 gave Miss P, from the initial sale of the phone agreement, all the way through to the end of the complaint. I think the Consumer Duty is relevant to this complaint, and I’ve also thought about other guidance the Financial Conduct Authority has published regarding support for vulnerable customers. These explain customers who have vulnerable characteristics can be at greater risk of harm when things go wrong. In June 2024, Miss P told O2 she is autistic. She explained she needed to get her bills in the post so her carer could help her manage them. When Miss P signed up for the phone contract online, her bills were automatically sent by email. O2 says it wasn’t aware Miss P is autistic until she disclosed it, and I agree it may not have been possible for O2 to support Miss P before then. But, once it was aware, I think O2 needed to ensure it reviewed the support it was giving Miss P. While financial businesses aren’t expected to tailor communications for every single customer, they are expected to listen to a customer’s requests and take reasonable steps to provide information in a way they are likely to understand. I’d also expect O2 to consider reasonable adjustments, particularly where a customer has a disability or vulnerability. Miss P explained she struggles to understand some forms of communications and needs information in writing so she can show her carer. She also says the loud music on phone lines triggers her audio sensitivity and can make her distressed. Miss P was referred to O2’s support team as a vulnerable customer, but she says there is still triggering loud music when calling this team – and this made it very difficult for her to use the phone to speak to O2. I’ve thought carefully about what the regulator says O2 ought to have done to support Miss P’s needs when she told O2 she couldn’t cope with the phone line. I think O2 needed to find

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4 a positive solution to ensure Miss P could find information about her account in a way that was accessible for her. O2 says it’s unreasonable to expect it to have a dedicated line without hold music – but this isn’t what I’d expect O2 to do. Instead, I think Miss P made it clear she struggled to talk to O2 using the phone line, so O2 ought to have explored other contact methods it already had in place that might be more suitable for her needs. For example, I think O2 ought to have considered allowing Miss P to contact the team by email or webchat or arranging for someone in the team to call Miss P back. I understand O2 uses some terms that are common in the communications industry, like a “spend cap”. I can’t direct O2 to change this term, but I’d expect O2 to explain what it means if Miss P asked for help. However, I appreciate it might be difficult for Miss P to do this if she was struggling to communicate with the support team at O2. O2 also asked Miss P for her medical history before it would consider writing off the debt. Within this document, Miss P says there was information she didn’t want O2 to see. I’m sorry to hear this caused Miss P so much worry and upset, and I want to assure her I’ve taken her concerns very seriously. I can understand why O2 might want to know more before deciding whether or not it could support her with the money she owed, but I can also appreciate why Miss P would be worried about sharing this information. Having thought about what happened, I think O2 only relied on the relevant medical information, relating to Miss P’s capacity and the impact of her autism, rather than other information contained in the GP records. I think this was a reasonable course of action for O2 to take, and I hope this reassures Miss P in some way. Overall, while I think O2 took some steps to provide extra support to Miss P, I think it could have done more to make sure the support was reasonably adjusted to suit her needs, once O2 was on notice of the impact this was having on her. Administering the debt I’ve thought about what happened when O2 passed the debt to L, and whether this was reasonable. O2 agreed Miss P could return the phone in July 2024, but it didn’t receive the handset until late August 2024. I’ve found that O2 had already passed the account to L in July 2024, before the phone was sent back. So, I don’t think it was unfair for O2 to follow its collections process in July 2024 and pass the account to L. However, once it confirmed the phone was received, O2 said it would waive the balance and arrange to close the account. This was in August 2024, but O2 didn’t do this until mid- November, after Miss P had received letters from L and her representative had complained. I think O2 treated Miss P unfairly here, as it delayed recalling the debt from L. This then had an impact on Miss P. So, I think O2 let Miss P down when supporting her here – and as such, it should pay her compensation to reflect this.

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5 Impact As I’ve explained above, I think O2 ought to have done more to support Miss P, and it didn’t act quickly enough to recall the debt from L once the phone was returned. I’ve thought about what her representative told me about the impact autism has on Miss P, in particular how she is affected by things that go wrong. I’m grateful Miss P has allowed me to understand how this has affected her, as it’s helped me to appreciate why she was at a greater risk of harm if something went wrong with the agreement with O2. O2 has accepted it let Miss P down when it didn’t recall the debt from L sooner. But Miss P says she thinks the way O2 treated her goes beyond poor customer service, and she feels discriminated against because she is autistic. I can understand why Miss P feels this way, because she says O2 has placed unreasonable barriers for her to get the right support, and these wouldn’t impact other customers. I agree that O2 hasn’t acted fairly and reasonably when supporting Miss P. I also think it hasn’t recognised just how its actions have made Miss P feel. I’m also mindful O2 says it already refunded the payments Miss P made towards the phone, meaning she was able to use the phone for a few months without repayment. I’ve kept this in mind when thinking about a fair award on the complaint. While the errors might only have a small impact on some customers, I can understand how it would have a greater impact on Miss P because of her vulnerable characteristics. I’ve thought about a fair amount of compensation to reflect the impact this had on Miss P, and I think the total amount O2 should pay Miss P is £400. If O2 has already paid the £100 it offered Miss P, it can deduct this from the award and pay the remaining £300 to Miss P. O2 told Miss P it would remove the default reported on her credit file if she returned the handset. But it says it doesn’t think it’s fair to remove the adverse information reported before the account defaulted, as Miss P was behind with the contractual payments on the device plan. I’ve thought carefully about this, as I’m mindful I’ve not seen the medical information Miss P provided to O2. So I don’t think I can reasonably say whether Miss P had capacity to understand the terms of the agreement or not. But O2 decided to end the agreement after looking at this, albeit as a goodwill gesture, and refund Miss P’s payments for the phone. Given the wider circumstances, and to draw a line under everything that’s happened, I think it’s reasonable for O2 to remove all adverse information from Miss P’s credit report, including the default and any missed or late payments. My final decision My final decision is that I uphold this complaint. Telefonica UK Limited trading as O2 must do the following: • Pay Miss P £400 to reflect the way its actions affected her, to the extent it hasn’t already done so. • Remove any adverse information relating to the device plan from Miss P’s credit

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6 report. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss P to accept or reject my decision before 27 May 2026. Hannah Dunkley Ombudsman

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