Slamming and other fixed line selling practices are generating increasing complaints to Ofcom and the communications super regulator is on the consultation trail with more consumer protection measures in mind.
When: November 2004
Ofcom published a consultation document, on whether new enforcement powers were needed to protect consumers from mis-selling of fixed line telecom services.
Following a previous consultation, Ofcom felt that consumer safeguards did not provide satisfactory consumer protection from this particular type of mis-selling, which describes a range of sales and marketing activities which are not fully transparent and/or are intended to mislead. In particular there is so called "slamming" where customers are switched from one supplier to another without their knowledge or consent.
In its latest consultation document, Ofcom notes a significant increase in complaints to Ofcom over recent months in this category, running consistently at over 700 a month since July 2004, a figure regarded by Ofcom as potentially the tip of the iceberg given the lack of awareness amongst consumers that Ofcom is the body to complain to in these cases.
New codes initiative
In the light of this, Ofcom is now proposing that service providers should be required to establish, under set guidelines, codes of practice. They also seek the power to take enforcement action if those codes are breached, including ultimately the imposition of financial penalties, although Ofcom has rejected the US style "automatic compensation" option for slamming as being disproportionate and an unwarranted increase in regulatory intervention.
In another gesture in the direction of less rather than more regulation, Ofcom also proposes the novel stroke of a "sunset" clause. Under this, the requirement for the code and compliance with it would lapse after two years unless a positive need were demonstrated to reinstate it.
Attached to the consultation document are proposed guidelines for the codes of practice. A "sale, marketing, advertising and promotion" section stipulates that codes must acquire compliance with CAP Code. In addition, advertisements and promotional literature must be clear, unambiguous, accurate and fair, containing no false or misleading information about price, value or service and in particular must not denigrate other companies.
Why this matters:
Ofcom requires a response to the consultation by 7 January 2005. If the responses received do not sway it from its intended course, Ofcom will publish a "notification and explanatory statement" early in 2005 and codes will have to be introduced by the industry, as per the guidelines, within one month after that.
This is a tight timeframe for telcos and, it has to be said, of questionable desirability given that so far as advertising and promotion are concerned at least, the Code guidelines do not suggest anything that is a material advance on the CAP Code and other existing laws and codes.