IPhone isn't recognising Contacts when receiving phone calls!

Whenever someone tries to call me, even if they don't have a private number and are in my contacts, it is coming up as 'Unknown' caller. Please help!

So when they call it says "Unknown" and not the number?
That suggests to me that the phone number of the person calling you is not being sent across the network and therefore the iPhone isn't being told the number, and therefore it can't match the number. If it was just the fact that a number was coming up instead of a name then it would be the case that you didn't have the number set up correctly in your contacts (e.g. missing area code).
So, you say your brother's "phone is set to send caller id". Are you sure about this? Can he call another phone and make sure? If that works then is that other phone on the same network as your iPhone?
There isn't a setting to turn off numbers and display unknown instead (and I can't see a use for one) so if you can prove this works on another phone on the same network as you, but not the iPhone, then it suggests to me that the iPhone is faulty...

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