Ofcom clobbers Virgin Media O2 with record £28m fine over cancellation failings

Ofcom has whacked a record £28 million fine on Virgin Media O2 after the operator made it “unreasonably difficult” for customers to cancel contracts and switch providers. 

The fine was reduced by a third after the network admitted the breaches and agreeing to settle the case.

The network has also been ordered to ensure every affected customer who complained has received any compensation or other remedies due within six months.

Ofcom accused Virgin Media O2 of running a two-tier retention system in which only a second group of agents could process cancellations, forcing more than one million customers to repeat their request before it could be actioned.

The regulator said millions of customer calls between January 2022 and September 2024 were affected by systemic failings that delayed or discouraged cancellations, in breach of its consumer protection rules.

Investigators also uncovered widespread mishandling of calls, including repeated attempts to persuade customers to stay, unnecessary call transfers, excessive periods on hold, dropped calls and failures to process cancellations. Ofcom said Virgin Media O2’s’s commission scheme rewarded agents for retaining customers, while inadequate training and oversight allowed the practices to continue.

Virgin Media O2 pointed out Ofcom’s investigation was between January 2022 and September 2024 and related to historic failings saying

“The issues which Ofcom identified, including the two-tier system, agent incentivisation, training and agent resourcing have been addressed through improvements made during and after their investigation”

 A Virgin Media spokesperson added: “We’re committed to giving all our customers great service and apologise to the small proportion who experienced an issue when contacting us to agree a new deal or cancel their service in the past.

 “We have completely redesigned our customer services in recent years, addressing the historic shortfalls identified by Ofcom through a number of improvements, and have resolved all formal customer complaints from this period providing redress where appropriate.

 “Our customer service turnaround strategy, underpinned by significant investment, has been transformational. Ofcom’s latest data shows that Virgin Media is now the least-complained-about broadband provider with complaints at record lows, and complaints specifically relating to ‘difficulties leaving’ were 89% lower last year than in 2023.

 “With One Touch Switch now in operation across the industry, and a wide range of competitive deals and services available, it’s never been easier for customers to choose the right package for them.”

Natalie Black, Group Director for Infrastructure and Connectivity at Ofcom, said: 

“Virgin Media made it harder for customers to cancel their contracts and then did not fully cooperate with our investigation. As a result, we are levelling our largest ever fine under our consumer protection rules for direct harm to consumers. Today, we are sending a clear message that any provider who wilfully acts against the interests of their customers will pay a heavy price.”

According to Ofcom, the failings caused customers “unreasonable effort, hassle and undue difficulty” when trying to leave, with some forced to make repeated calls while others cancelled direct debits in frustration, leading in some cases to missed payments affecting their credit records.

The £28 million penalty is the largest it has issued under its consumer protection powers. The level reflected the scale of consumer harm, the financial benefit Virgin Media O2 was likely to have gained, the company’s failure to prevent the misconduct, its lack of full cooperation during the investigation and a previous breach of the same rules in 2018.

The UK’s One Touch Switch process has now come into force, allowing broadband customers to change provider by contacting only their new supplier rather than their existing one.

The decision serves as a warning to telcos that customer retention strategies must not create unnecessary barriers to switching, with Ofcom prepared to impose substantial financial penalties where firms breach consumer protection rules.