15% of accounts held are telecommunications. One quarter of accounts default. 10% of defaults are repaid. The average default is £300. 

The image below shows an example telecommunications (TM) default.

A telecommunications default is most often against a mobile phone account. Does this reflect a lack of capacity to pay the bill? Or has the default has arisen from a consumer dispute?

If TM accounts are the only defaults on the credit account (or only mixed with Mail Order – see below) this may indicate a dispute rather than an incapacity to pay the bill. 45 per cent of consumers say they have had a bad experience with a mobile phone operator. 

Larger than expected bills can lead to a dispute, including roaming charges and excess paid-for data consumption. Going just a few megabytes over your allowance can be very expensive. 

This can be caused by disputes over terms and conditions. 80% of respondents to a survey by Deloitte said that they accept terms and conditions on their mobile phones most of the time without reading them. 

One in ten people that had a bad experience changed operator. This can be before the end of a contract with that supplier. 

4 out of 10 of the 80 million mobile phones are pay monthly contracts. Of all smartphone owners 60% have had their handsets in the last 18 months. 10% are checking their providers website every month to look at new devices. 

The average phone lasts 15 months before it is broken, lost or stolen. Contracts for the best handsets last 24 months. Loan applicants may decide to stop paying one contract and move onto a new one. Recently though, phone replacement has slumped. In 2013 consumers bought a new phone every 20 months. Not they buy one every 29 months.

Each case is unique, but its undoubtable that many defaults arise from consumer disputes and dissatisfaction rather than an inability to pay. If someone wants to cancel a contract and there’s still something left to pay, they can easily end up with a default on their record. This will last 6 years. 

A change in circumstance is important. Many contracts last two years. A lot can happen to income over that period.  This may mean that the customer can no longer afford to pay the bill. 

This is unlikely to happen in isolation. If the credit report shows multiple missed payments or defaults on other account types, especially credit cards and loans – then a decline is more likely. 

Mobile defaults on their own will probably result in an accept rather than a decline.

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