Telefonica UK Limited · DRN-6172478

The complaint Mr P complains about a mobile telephone handset he acquired using a fixed sum loan agreement from Telefonica UK Limited trading as O2. What happened In November 2024, Mr P took out a fixed sum loan agreement with Telefonica to pay for a brand new mobile telephone handset with a cash price of £1,542. After making an upfront payment, Mr P was scheduled to make monthly payments of about £32 over a four year period. Around nine months later, Mr P says he noticed a fault with the handset’s screen and its battery life. So, he raised his concerns with Telefonica. To try and help, Telefonica say they offered to inspect the device, and sent Mr P a prepaid envelope for him to send the handset to them. But, Mr P sent the handset to its manufacturer for diagnosis and repair instead. The manufacturer returned the handset to Mr P. It’s not clear why this was, but Mr P says the handset came back with damage. He says the back of the device was loose and it wouldn’t turn on when activated. Mr P says he had lost confidence in the manufacturer and complained to Telefonica. Because the manufacturer had already had a chance to put things right, he asked Telefonica to repair or replace the handset. In their final response to Mr P’s complaint, Telefonica said that they would inspect the handset and let Mr P know if they could repair it without further cost to him. They also said that Mr P should complain to the manufacturer separately, if he wasn’t happy with their conduct. Mr P didn’t accept Telefonica’s response and said he wanted the handset repaired, in light of the damage caused by the manufacturer. Mr P also brought his complaint to this service. After we started our review of Mr P’s case, Telefonica reiterated to us their offer to inspect the handset. They also said they would offer Mr P £100 for the distress and inconvenience he had experienced. One of our investigators considered Telefonica’s suggestion and found that it was a fair way to settle Mr P’s complaint. Mr P didn’t agree with the investigator’s findings and said they hadn’t reached out to him about a repair. He said he had followed the guidance given to him, in the instance of discovering a fault with the handset. He also said he was concerned that Telefonica would use the damage by the manufacturer, as a reason to decline a repair. The investigator didn’t change her conclusions and Mr P’s complaint has now been passed to me to make a final decision. 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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Mr P paid for the mobile telephone device using a fixed sum loan agreement. This is a regulated consumer credit agreement, and our service is able to consider complaints relating to these sorts of contracts. The Consumer Rights Act 2015 (CRA) is relevant to this complaint. The CRA implies terms into the contract that goods supplied will be of satisfactory quality. By satisfactory quality, the CRA says this is what a reasonable person would consider satisfactory given the price, description, and other relevant circumstances. The CRA also sets out what remedies are available to consumers if statutory rights under a goods or services contract are not met. In summary, the CRA says that goods must conform to the contract within the first six months. So, if the goods are found to be faulty within that period, it’s assumed that the fault was present when the goods were supplied, unless there’s compelling evidence to suggest otherwise. Outside of those six months, it’s for Mr P to show that the goods were not of satisfactory quality. Mr P was provided with a brand new mobile telephone device, so I think it was reasonable for him to expect it to be free from faults for a considerable period of time. However, Mr P says he noticed faults around nine months after he bought the handset. This means he had used the handset for a significant amount of time, before the fault appeared. So, I think it was reasonable for Mr P to look to get an inspection or appraisal of the device. That way he could demonstrate the general condition of the handset and any fault he says was present. I’ve looked at the terms of the equipment agreement, provided to Mr P as an addition to the terms of the loan itself. Having done so, I can see where section 5.1 says: “If you bought your Equipment directly from us and it is defective, not in accordance with any description given to you by us, not reasonably fit for purpose or it develops a fault, you'll be able to return it for repair and, if applicable, a replacement or refund if you follow our Faults and Repairs policy.” With this in mind, I think the paperwork given to Mr P when he took out his agreement with Telefonica, says they should be given the device to inspect in the event of a fault. I can see from Telefonica’s records where they engaged with Mr P and sent him a prepaid envelope in August 2025. The purpose of this was so that Mr P could send the handset to Telefonica, allowing them an opportunity to assess the faults Mr P had spotted. The records go on to show where Mr P didn’t make use of the envelope. Against this background, I think Telefonica fulfilled their duty to Mr P, by providing a method for them to inspect the handset at little or no cost to Mr P. So, I think Telefonica treated Mr P fairly, when they were made aware of his concerns about the performance of the handset. However, Mr P chose to send the handset directly to the manufacturer. Although I can see from the terms of Mr P’s agreement, it says Mr P should contact Telefonica in the first instance, I don’t think it was unreasonable for Mr P to have involved the manufacturer. But, in doing so, I think Mr P gave the responsibility of the device to the manufacturer, instead of Telefonica. Once the handset was with the manufacturer, Mr P says they told him they couldn’t repair it. I’ve not seen a copy of the report from the manufacturer, or a copy of any emails confirming the extent of the faults found. So, other than what Mr P has told us, there isn’t any evidence of the cause of problem with the handset. Overall, I think it was reasonable for Telefonica to ask Mr P to send the device to them for inspection. I say this as I don’t think it would be fair to require Telefonica to agree to a repair,

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where a fault hasn’t been demonstrated. I’m also not persuaded that Telefonica have been given a first opportunity to repair the handset. I understand that Mr P feels that opportunity was taken by the manufacturer. But, I’ve already found that Telefonica’s terms directed Mr P to them in the first instance. It then follows that I don’t think the evidence shows where Telefonica might have breached their contract with Mr P, in the way that he has suggested. Telefonica have explained to us that they recognise the device is still within the warranty period offered by the manufacturer. They say a reasonable way forward is to allow them to inspect the handset, and decide whether or not they are able to offer a repair, at no further cost to Mr P. On the face of it, I think Telefonica’s suggestion here is fair, as it will allow an inspection and provide Mr P with options. In reaching this finding, I do of course acknowledge Mr P’s concerns that the damage he says was caused by the manufacturer, may mean Telefonica will decline to repair the handset free of charge. But, I’ve found that Telefonica are not required to offer a repair without cost at this stage. So, I think Telefonica’s suggestion will enable Mr P to at least move forward with getting an appraisal of the extent of the damage. I’m aware that most of Mr P’s dissatisfaction here, is about the condition of the handset when it was returned to him by the manufacturer. Given my findings, I don’t think Telefonica is responsible for the actions of the manufacturer here. So, I agree with Telefonica, in that Mr P should raise his concerns about the current condition of the handset directly with the manufacturer, if he would like them to review their conduct towards him. While I’ve not been able to find that Telefonica have breached their contract with Mr P, I have considered how they’ve treated him while raising his concerns about the quality of the handset. I can see where it would have been beneficial for Telefonica to have reiterated the terms of the contract in their final response letter. I think it would have helped Mr P to have been invited to again send the device to Telefonica. So, I think Telefonica have caused a delay to giving Mr P the correct course of action. I think this means Mr P has experienced distress and inconvenience due to that delay. So, I think it’s fair for Telefonica to make a payment to Mr P to reflect that. In all the individual circumstances of Mr P’s complaint, I think Telefonica’s offer to pay Mr P £100 for the distress and inconvenience he experienced is fair. Putting things right For the reasons I’ve explained, Telefonica UK Limited trading as O2 should: • Arrange with Mr P for him to send the handset to Telefonica for inspection, at no additional cost to him; and • Pay Mr P £100 for the distress and inconvenience caused. My final decision My final decision is that I uphold this complaint and require Telefonica UK Limited trading as O2 to put things right as set out above.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P to accept or reject my decision before 24 April 2026. Sam Wedderburn Ombudsman

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