The regulator opened an investigation into the way O2 was billing customers who were leaving it in 2019.

When a customer leaves a mobile provider, the company provides a final bill setting out any remaining fees and charges the customer must pay before their account is closed.

But between at least 2011 and 2019, an error in the way O2’s systems calculated the final bills for pay-monthly mobile customers meant many people were billed for some charges twice.

In total, more than 250,000 customers were billed for these incorrect charges, amounting to a total of £40.7m in overcharging. About 140,000 customers actually paid the extra charges, paying a total of £2.4m.

O2 had initially identified issues with its billing processes in 2011, but efforts to address these problems were not successful and customers continued to be overcharged.

Ofcom found that O2 breached its rules, and it has fined the company £10.5m. O2 has accepted the findings of the investigation. The money raised from the fine will be passed on to HM Treasury.

Refunds for customers

O2 has refunded the customers affected in full for the extra charges they paid, plus an additional 4%.

For those customers that O2 has not been able to reach, it has committed to make a donation to charity for the equivalent amount of money those customers were overcharged. It has also changed its billing processes to prevent this issue from happening again.

Any customers with evidence that they were affected by these billing errors, but who have not yet been refunded, are advised to contact O2 directly.

Gaucho Rasmussen, Ofcom’s enforcement director, said: “Mobile customers trust their provider to bill them correctly and fix any errors as quickly as possible. But these billing issues continued for a number of years without sufficient action from O2, and thousands of customers were overcharged as a result. This a serious breach of our rules and this fine is a reminder that we will step in if we see companies failing to protect their customers.

“O2 has refunded the customers who were affected, and we are satisfied the company has taken action to prevent this happening again.”

Ernest Doku, mobiles expert at Uswitch.com, said: “For more than eight years, a problem with O2’s billing system led to thousands of pay monthly customers being double-charged for certain items in their final bill.

“Being accurately billed is such a fundamental part of the agreement between customer and provider, so it’s very disappointing that a systemic problem should have been allowed to go on so long.

“The scale of the fine imposed on O2 shows how seriously Ofcom takes such matters, and the regulator’s decisive action sends a clear message to other mobile networks that errors with something as fundamental as billing will not be tolerated.”

An O2 spokesperson said: “As the operator proactively driving over £168m value back to our customers in the last year alone, we are disappointed by this technical error and sincerely apologise to customers impacted.

“As Ofcom have stated today, the vast majority of funds reported were not overpaid. Only 6% – £2.4m – relates to money that was overpaid by customers.

“We identified the issue ourselves and notified our industry billing auditor. We have also taken proactive steps to refund all impacted customers for the extra charges they paid, plus an additional 4%.”