Telefonica UK Limited trading as O2 · DRN-6205481

The complaint Mr W complains Telefonica UK Limited trading as O2 failed to cancel a credit agreement when he requested this. What happened The background to this complaint is well known to both parties, so I won’t repeat it at length here. In summary, in June 2025, Mr W ordered a phone financed by a fixed sum loan agreement with O2. Two days later Mr W changed his mind and no longer wished to go ahead with purchasing the phone or continuing with the finance agreement and says this was agreed with O2. However, Mr W says when checking his account with O2, it still showed the account as being active. Having complained to O2, Mr W was told he had to pay a significant termination fee. Unhappy with O2’s response, Mr W referred his complaint to the Financial Ombudsman. In providing its submission, to our Service, O2 acknowledged it had made some errors. It said although Mr W had cancelled his finance agreement, it had been activated in error. O2 said the agreement had now been cancelled, and it had reimbursed the payments Mr W had made towards the agreement. O2 confirmed it had amended Mr W’s credit file and offered £50 to apologise for the errors made. Mr W didn’t accept O2’s offer and said a fairer outcome would be for O2 to write off the balances for all of his agreements held with it, alongside donating to a charity of his choosing. One of our Investigator’s looked into things and thought O2 had made errors. He found it had now taken reasonable steps to put things right but thought it should increase its compensation to £200. Our Investigator it wouldn’t be proportionate to ask O2 to write off other agreements, and he wouldn’t direct it to donate to a charity on Mr W’s behalf. O2 disagreed with our Investigator’s recommendations. It said when cancelling the agreement, it processed a refund to Mr W and this was £34.35 more than he’d paid. It said it would increase its offer to £100 compensation. Having shared O2’s offer with Mr W, he didn’t accept this and said he considered our Investigator’s recommendation of £200 to be a fair resolution. As the matter wasn’t resolved, the complaint has been passed to me to decide. 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.

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My understanding is that the underlying crux of this complaint has now been resolved. Being that O2 has confirmed the fixed sum loan agreement has been cancelled, any payments made have been refunded and any adverse information in relation to the loan agreement has been removed from Mr W’s credit file. Therefore, the point that remains for me to decide, is fair compensation for the issues that arose. Considering everything that happened, I do find the recommendation of £200 to be reasonable and consider this a fair outcome to Mr W’s complaint. I say this, as after Mr W cancelled the credit agreement during the cooling off period, this wasn’t correctly actioned by O2. I can see that Mr W attempted to resolve the issue a number of times without success. This led to adverse information being recorded on Mr W’s credit file, which I don’t doubt would have been concerning to see. Following this, Mr W has provided evidence from O2, stating that it had passed his account to a third-party debt collection agency. Again, I don’t doubt this would have been concerning for Mr W to receive, particularly as he’d tried to contact O2 to resolve the issue. Following this, Mr W raised a complaint, however it doesn’t appear O2 got to the heart of Mr W’s concerns, rather stated that he would have to pay a significant exit fee, which I understand further compounded matters and the. I note O2 has explained its recoveries process was automatic and it didn’t intend any malice. I have no reason to doubt this; however it would appear there was a number of opportunities for O2 to resolve the matter sooner and considering the impact on Mr W, I do think these were noticeable errors which went on for a number of weeks. I’ve taken on board O2’s comments that in refunding the payments Mr W had already made, it issued an over-refund of £34.35, which it won’t ask to be paid back. Taking this into consideration alongside everything that happened, I do find it reasonable that alongside this, O2 pay Mr W £200 compensation to apologise for the errors that it made and find this to be in line with how our Service awards compensation. My final decision For the reasons explained above, I uphold this complaint. To put things right, I direct Telefonica UK Limited trading as O2 to pay Mr W any of the £200 compensation it hasn’t already, in resolution of this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr W to accept or reject my decision before 24 April 2026. Christopher Convery Ombudsman

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