An inquiry into "cash-back" mobile phone deals has been welcomed by a Birmingham MP.
Roger Godsiff (Lab Sparkbrook & Small Heath) has led calls for tighter regulation of the mobile phone industry after retailer Dial a Mobile closed last year, leaving thousands of his constituents major debts.
Last night he welcomed the announcement telecom regulator Ofcom is to investigate retail chain Phones4U following a number of complaints about cashback.
These involve retailers selling packages, often long term contracts, with a guarantee customers will receive some payment back, effectively cutting the cost.
When Dial a Mobile closed, it meant customers never received their cash-back but they were still tied into contracts with networks, now much more expensive.
Ofcom is investigating complaints Phones4U customers found it difficult to claim back the money promised.
The regulator said: "Ofcom has opened this investigation following receipt of a large number of complaints from consumers concerning a range of issues, including mis-selling, by Phones4U, an independent mobile phone retailer."
Mr Godsiff said: "Again, it appears 'cash-back deals' will be at the centre of this probe and it makes a complete mockery of under-takings voluntary or otherwise made by the network providers to clean up their act and those of independent retailers that sell their phones and take up their contracts.
"Ofcom is big on investigations but not so hot on protecting customers inconvenienced or swindled, nor can it offer any remedy for those pursued ruthlessly through debt collection agencies and the courts by the network providers who just clean up and move on."
"I shall be writing to Ed Richards, chief executive of Ofcom, impressing on him the need for a thorough investigation particularly in respect of the role played by network providers but also for customers to receive compensation." In a Commons motion, Mr Godsiff urged Ofcom to investigate whether operators are acting as a "cartel".
