UK, July 2025 — Thousands of small businesses across the United Kingdom are reportedly trapped in lengthy telecoms equipment rental contracts with grossly inflated prices, according to a BBC investigation. Experts and business owners have raised serious concerns about unethical sales practices that push costly finance deals, leaving some firms on the brink of collapse.
Small Businesses Burdened by Costly Phone Lease Agreements
Gary Pride, owner of a graphic design firm in Bradford, exemplifies the challenges faced by many small business owners. Despite steering his company through economic recessions, a damaging fire, and the pandemic’s uncertainty, it is a £54,432 charge over 10 years for just five rented phones and accompanying software that threatens his business’s survival.
“I’ve not been paying myself so I could cover that bill every month,” Pride told the BBC, visibly distressed. The financial strain is deeply affecting his mental health, requiring antidepressants and disrupting his sleep. “I feel I’ve let myself down and all my staff too,” he added.
Pride initially signed a seven-year finance lease in 2017 for 4Com’s HiHi phones, unaware the monthly costs would more than double from approximately £200 during a two-year introductory period to over £550 thereafter. The contract, part of a finance deal with a third-party lessor, was not transparently explained to him at signing, he claims.
‘No Real Choice’ but to Continue Paying
The contracts reviewed by the BBC explicitly state they are “universal rental agreements” with billing by third-party funders. Yet, Pride and other customers say these critical details were not clearly communicated verbally or highlighted during the sales process.
Feeling “conned,” Pride lodged complaints with 4Com and was offered a phone upgrade with a “loyalty rebate” but only by agreeing to a new seven-year finance agreement. This renewed deal compounded his payments, bringing his total financial obligation to over £54,000 for ten years of rental fees. These amounts are on top of additional charges for services such as broadband and maintenance levied by 4Com.
“I could get a top-range Range Rover for what I’ve paid for these phones,” Pride said. Despite wanting to exit, he cannot afford the termination fee estimated at £24,584.
Pride is among more than 160 small business owners who responded to the BBC’s undercover inquiry last year, with many disclosing they had also signed multiple long-term lease agreements within a short period.
Industry Insider Reveals Repeated Revenue from Same Customers
A former senior manager at 4Com, speaking on condition of anonymity, confirmed that it is common practice to lock clients into multi-year contracts framed as upgrades to extract ongoing finance revenue. “They’re not only getting ripped off once, they’re getting ripped off again two or three years later,” the source explained. The company, which serves approximately 17,000 customers nationally, is reportedly generating “hundreds of thousands of pounds each month” from these deals.
Widespread Complaints of Mis-Selling and Contractual Confusion
The BBC’s investigation found troubling patterns: sales pitches often conflicted with written terms, finance obligations were downplayed or omitted in conversations, and contracts were rushed without adequate opportunity for review. Unlike consumer agreements, business-to-business contracts lack a statutory cooling-off period, leaving clients contractually bound for five to seven years.
Over 50% of complainants were small family-run businesses with fewer than ten employees. The emotional and financial toll has been severe. One business owner contacted the BBC in tears, fearing imminent closure. Another admitted uncertainty over actual payments, citing “confusing contracts.” Some companies were reportedly pressured into non-disclosure deals in exchange for termination discounts.
4Com Denies Misconduct, Cites Transparency and Customer Satisfaction
In response, 4Com issued a statement emphasizing its commitment to transparency and competitive pricing. “Upgrades are not compulsory, and all pricing and details were presented clearly to customers,” the company said. It claimed that the disputed historic cases represent fewer than 1% of its client base.
The company highlighted its extensive compliance checks and staff training, noting the specific salesman featured in the BBC’s covert footage no longer works there.
Independent Experts Confirm Price Inflation and Question Lease Terms
Four independent telecom industry specialists, consulted by the BBC, concluded that customers were routinely charged prices far exceeding “industry standards.” Although the exact retail price of HiHi phones is not public, experts identified gross markups on equipment and unnecessary bundled services which other providers include free of charge such as call logging.
One expert described the long seven-year leases as designed “solely to maximize finance revenue rather than satisfy genuine business needs.” Jonny Rae, a telecommunications consultant with 15 years’ experience, labeled the practices “unethical” and “outrageous” but said they had persisted “for over a decade.”
“The finance companies approving these agreements are enabling exploitative contracts at small businesses’ expense,” Rae said.
Case Study: Letting Agent Overcharged by Tens of Thousands
Richard Jackson runs a small property letting agency in Sheffield. After signing a 4Com finance agreement in 2021, he owes more than £20,000 for just three phones and software.
“I feel angry, ripped off, and trapped,” Jackson told the BBC. When seeking a fourth phone, 4Com presented a new seven-year lease offer exceeding £40,000—more than 20 times the market cost for the hardware, experts observed. Jackson refused the deal and continues to service his existing debt, lamenting he’d rather invest in staff or personal goals.
4Com maintains no evidence exists that Jackson was mis-sold or charged inflated prices.
Regulatory Gaps Leave Small Businesses Vulnerable
Complaints brought before the Communications Ombudsman have largely been dismissed, partly because leasing agreements fall outside direct Financial Conduct Authority oversight if signed by limited companies. These contracts are considered unregulated business leases, limiting consumer protections.
Ofcom, the UK telecoms regulator, stated: “If we see evidence of widespread issues, we have shown we can and will consider taking action.”
The Finance & Leasing Association, representing asset finance firms, said its members aim to “put the customer first” and acknowledged SME owners’ challenges. However, it also stressed that clients bear responsibility to scrutinize contract terms carefully.
Broader Implications for UK SMEs
Telecommunications is a critical operational component for UK small businesses, many of which operate on narrow margins. Unscrupulous finance agreements jeopardize their sustainability, impeding growth and employment.
Industry experts urge improved transparency, shorter contract durations, and enhanced regulatory oversight to protect SMEs. There are calls for extending cooling-off rights to business contracts and mandating clearer disclosures about finance implications at sales negotiations.
Looking Ahead: Calls for Reform
As the BBC investigation highlights systemic weaknesses in telecom equipment leasing practices, policymakers face pressure to introduce safeguards that prevent exploitation of small businesses key contributors to the UK economy.
Small business representatives advocate for greater awareness campaigns and support mechanisms to empower owners in contract negotiations.
Meanwhile, affected business owners like Gary Pride continue to endure financial hardship, hoping their plight will prompt meaningful change.
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