Telefonica UK Limited · DRN-6194108

The complaint Mr B is unhappy with Telefonica UK Limited trading as O2’s actions when he reported his mobile phone had been stolen. What happened Mr B upgraded his mobile phone at an O2 store in London, in July 2025. He says the phone was stolen a few days later, and he returned to the O2 store for help. Mr B says O2 didn’t support him, despite living with a disability. He says O2 failed to block the SIM card in the stole phone and didn’t block the IMEI for the stolen handset until August 2025. Mr B says this meant the thieves could access the apps on his phone, and they used them to transfer funds out of a trading platform account and bank account. O2 says Mr B remains liable to repay the device plan loan agreement he took out when he upgraded the phone. It said the O2 store had ordered a replacement SIM card for Mr B when he reported the theft but found it hadn’t also blocked the IMEI. O2 confirmed this was completed in mid-August. But it said the block would only affect the handset’s use on mobile networks – and the phone could still be accessed and used with a WIFI connection. When our Investigator asked O2 for its case files, O2 offered to pay Mr B £100 as a goodwill gesture to resolve his complaint. It later increased this offer to £300 when the Investigator shared more evidence from Mr B, including details of the impact on his health. Mr B wasn’t happy with this offer and brought the complaint to our service. He said O2 ought to have done more to protect him from fraud after he reported the phone as stolen in store. Mr B said the stress caused by the fraud was significant enough that he needed medical treatment, and so £300 wasn’t a fair reflection of the impact it had on him. Our Investigator said they thought O2 ought to have ensured the phone’s IMEI had been blocked promptly when Mr B reported the theft. But he wasn’t persuaded this delay led to Mr B being a victim of fraud. He thought the finance apps on the phone could have been accessed in other ways even if the handset itself had been blocked. He acknowledged Mr B’s vulnerability meant the impact had been greater than it might have been for other customers, and overall he thought £300 was a fair amount of compensation to reflect this. Mr B didn’t agree with the outcome and asked for a final decision from an Ombudsman. I wrote to Mr B informally to clarify the reasons why I could consider a complaint about the handset being blocked, and my provisional thoughts about the complaint – and provided a copy to O2. I said: We can consider complaints about regulated financial activity. In your case, O2 provided a fixed-sum loan agreement for your phone. So, as O2 carried out a regulated activity when it lent the agreement, I’m able to look at matters regarding the finance. Although your complaint relates to O2’s delay in blocking your handset, I’ve reviewed the terms and conditions of the loan agreement, and it says:

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11.2 In certain limited circumstances, such as where we receive your instructions to do so, or where we reasonably suspect fraud, we may disable your Device. I think this term is quite vague, and O2 hasn’t said what limited circumstances it refers to here. But, on balance, I think I can reasonably interpret this term as meaning your complaint about O2 not blocking his phone’s IMEI forms part of the terms of the credit agreement and therefore is part of the regulated activity O2 carried out. I understand you strongly think O2’s actions led to you losing money from various accounts, as well as personal data and photos. I’m very sorry to hear you were a victim of theft and fraud, and how much this affected your wellbeing. I want to stress that I don’t doubt what you’ve told me about the impact this had on you. I would remind O2 of its obligations to support you if you have a vulnerability or will struggle to repay the loan agreement. But, having considered all the evidence on the case, I don’t think O2 needs to do more than it’s already offered. I say this because: • I haven’t seen enough evidence to persuade me that your losses wouldn’t have occurred if O2 had blocked the handset sooner. Also, as this type of fraud is sophisticated and ever-changing, I can’t say for sure if blocking the phone sooner would’ve stopped the fraudsters accessing your accounts and data. • I’d need to be persuaded you took reasonable steps to prevent fraud, such as informing your banks and changing your passwords on the accounts after the theft. • When O2 says the phone would be “disabled” or “blocked” I don’t think this would disable the phone completely. It’s likely the apps and data would still be accessible on WIFI or when using another SIM. • I can’t make an award for the impact caused by the fraud itself, instead I can only make an award for the things O2 is responsible for. Having thought about all of this, I think O2’s offer to pay you £300 is a fair way to resolve the complaint. I think it would be fair for O2 to either pay this amount to you directly or put it towards the remaining balance of your loan agreement if you’d prefer this. O2 didn’t respond to my message. Mr B asked me to consider that O2 failed to cancel the SIM and phoneline associated with his phone. He said this delay led to the trading platform app and his banking app transactions being verified via the active phone number. He said this demonstrated O2 was responsible for him losing funds as it hadn’t cancelled the SIM when he requested. As Mr B asked me to consider the case further, I’ve now made a final decision on the complaint. 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. Having done so, I agree with the outcome reached by the Investigator – and I’ll explain why.

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Mr B has made several detailed points in his complaint. I’ve considered everything he’s said and all the information on the file. But in my decision, I do not intend to refer to everything or address every point made. I mean no discourtesy by this, instead I will focus on what I see as being the key outstanding points following the Investigator’s outcome, and the reasons for making my decision. When Mr B upgraded his phone in July 2025 he paid for it with a fixed sum loan agreement, also from O2. This is known as a device plan and is a regulated consumer credit agreement. So our service can consider a complaint about the device plan and the way O2 managed the plan. As I’ve explained above, the terms of the device plan also state O2 can restrict the handset in certain circumstances, and I think this can be reasonably interpreted to include where Mr B reported the phone as stolen. Mr B has also complained about his SIM and the associated airtime contract. The SIM and data services aren’t part of the device plan, they are a separate communications contract which isn’t a regulated financial contract. This means our service can’t consider a complaint regarding the way O2 acted on Mr B’s airtime contract, or how it managed his SIM. I appreciate Mr B strongly thinks O2 allowed fraud to happen on his accounts because it didn’t block his SIM. O2 says the SIM in the stolen phone would have been blocked when a replacement SIM was requested, around one week before the transactions took place on Mr B’s finance accounts. If Mr B disagrees with this, he will need to make a separate complaint to O2 about the way it managed him SIM and the airtime contract. O2 should then confirm if he has a right to take this part of the complaint further if he remains unhappy. My focus in this final decision is whether O2 treated Mr B fairly with regards to his device plan agreement. Our Investigator explained why it’s reasonable for O2 to continue to hold Mr B liable for the device plan agreement – and Mr B hasn’t disputed this. I’d like to take the opportunity to remind O2 again of its obligations to support Mr B as a customer who has disclosed a vulnerability, especially if he says he will struggle to repay the agreement. Mr B remains unhappy because he says he suffered financial losses as a consequence of O2’s actions. In order for me to agree, I’d need to be persuaded Mr B suffered a loss that stemmed from something O2 did wrong. I’d also need to consider if Mr B took steps to mitigate his losses. I think O2 let Mr B down because it didn’t block his device until mid-August, and this caused him a lot of upset and worry. But I think it would be challenging for Mr B to show he lost money as a direct result of the handset IMEI being unblocked. I say this because, as I understand it, blocking the handset’s IMEI would have only prevented it from being used on a mobile network – it could still be accessed and used with an internet connection. Mr B says he took steps to secure the phone, but he says the thieves must have been able to access it. I think it’s reasonable for O2 to question how it was possible for a third party to continue to access the phone, and whether Mr B took reasonable steps to mitigate any losses in the period between the theft and the money being taken from his accounts. I appreciate Mr B has argued that O2 ought to have told him what to do to protect his money, but I don’t think it reasonably could have foreseen that Mr B’s accounts would be accessed, and I can’t reasonably expect O2 to contact the account providers on Mr B’s behalf. I think there was also some responsibility on Mr B to let his account providers know his accounts might be compromised, in order to mitigate the risk to his finances.

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Overall, I’m not persuaded it’s fair to tell O2 to refund the money Mr B lost from his accounts. Instead, I think it’s fair for O2 to compensate Mr B for the impact caused when it didn’t block his device promptly. I’ve thought about the further information Mr B provided, how O2’s actions affected Mr B and whether this impact was higher because Mr B has a vulnerable characteristic. Having done so, I still think £300 is a fair award to reflect this impact. So, I think O2 needs to pay Mr B £300, to the extent it hasn’t already done so. I understand this isn’t the outcome Mr B was hoping for, but I hope I’ve been able to explain the reasons why, in the circumstances of this complaint, I won’t be asking O2 to do more than this. My final decision My final decision is that I uphold this complaint. To put things right, Telefonica UK Limited trading as O2 must pay Mr B £300 – to the extent it hasn’t already done so. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 28 April 2026. Hannah Dunkley Ombudsman

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