posted 27th January 2026
For many small and medium-sized businesses, switching telecoms provider feels like a routine commercial decision. A call promising lower bills, a low-cost phone system or a modern upgrade can sound like a sensible efficiency. Yet for a growing number of business owners, what initially appears to be a cost-saving exercise becomes a long-term financial commitment that proves difficult, expensive and hard, but not impossible to escape.
Recent media scrutiny of the UK business telecoms sector, including a widely reported BBC investigation into the reseller 4Com, has drawn attention to how complex contract structures, incentive schemes and third-party finance arrangements can produce outcomes that many customers say they were not properly told about, did not fully understand, or believe they were mis-sold. While not every provider operates improperly, the risks inherent in many business telecoms deals are frequently underestimated.
Before signing, business owners should be alert to several recurring red flags.
1. Low-Cost Systems That Aren’t Truly Low Cost.
One of the most common incentives offered is a low-cost or heavily discounted phone system, often described as being included “within the deal”. In practice, this equipment is rarely supplied at minimal cost. It is typically provided under a separate lease or finance agreement, often running for five to seven years.
The monthly cost of this finance is commonly bundled into the headline figure quoted by the salesperson. The risk is that business owners focus on apparent affordability at the outset without being fully told about the long-term liability — particularly once incentives fall away.
2. Rebates That Mask the True Cost.
A particularly important, and often misunderstood feature of many business telecoms deals is the use of rebates. In these arrangements, the monthly contract cost is artificially reduced for the first 12–24 months by way of a rebate paid back to the customer. This creates the impression of a competitive, low-cost arrangement. However, once the rebate period ends, the true underlying cost of the contract becomes clear, and monthly charges can rise sharply.
Crucially, these rebates are often self-financing. Rather than being funded by the provider, the rebate may be drawn from the business’s own long-term lease or finance payments. In effect, money is returned at the beginning, only to be recovered later when the rebate stops. Many business owners say this structure was not explained to them at the point of sale.
3. “We’ll Pay Off Your Existing Contract”
Another frequently used incentive is the promise to “pay off” or “clear” a business’s existing telecoms contract.
While this can sound attractive, business owners should examine how this is achieved. In many cases, the existing finance is not settled at all. Instead, it is refinanced or rolled over into a new agreement.
The outstanding balance is absorbed into a fresh lease or finance contract, often over a longer term.
The result is not reduced liability, but increased overall debt. Businesses frequently report that this was not made clear during the sales process.
4. “Cancel Anytime” Claims and the Reality of Exit Fees.
Many telecoms providers refer customers to Codes of Conduct or industry standards suggesting contracts can be cancelled “at any time”. This wording can be misleading if taken at face value.
While a business may technically be able to request cancellation, this does not mean it can exit without cost. Most business telecoms contracts include substantial early termination charges, often calculated as the full remaining value of the contract.
These exit fees are often not highlighted during sales discussions, despite being clearly enforceable under the contract. Codes of Conduct do not override legally binding contract terms.
5. Multiple Contracts Signed at Once.
Another red flag is being asked to sign several documents in one sitting, often during a single sales call or visit. These may include:
- A telecoms service agreement
- A lease or finance agreement with a third-party funder
- Direct debit mandates and supporting paperwork
Sales conversations often focus on a single monthly figure, while the legal reality of multiple binding agreements is not always properly explained.
6. Pressure Selling and the Reseller Model.
High-pressure sales tactics should always raise concern and are frequently reported by business owners who later say they were not given the full picture. Statements such as:
- “This deal is only available today”
- “We just need a quick signature to secure the rebate”
- “Your contract is about to expire”
Many providers operate as resellers, rather than network owners, which can blur accountability. The BBC’s investigation into 4Com brought wider attention to how commission-driven sales models, combined with finance agreements and rebate structures, can lead to allegations of mis-selling. While investigations do not determine wrongdoing, they underline the importance of transparency and informed consent.
What If You’ve Already Signed?
Many business owners assume that once a contract is signed, nothing can be done. That is not always the case. A specialist legal review can identify issues such as:
- Mis-selling or material non-disclosure
- Lack of informed consent
- Disproportionate or unenforceable exit fees
- Procedural or regulatory shortcomings
Each case turns on its facts, but business owners should not assume they are without options.
Contact Us.
Business telecoms contracts are not utility bills, they are long-term commercial finance arrangements. Where key information is not disclosed, poorly explained or misrepresented, the consequences can be severe.
At Meridian Legal Services, we specialise in helping business owners who believe they were mis-sold telecoms contracts or not properly informed about associated lease or finance agreements.
Awareness is the first line of defence, but expert advice can be critical once a contract is in place.
Contact us to discuss your case.
