Unprecedented changes are afoot at PhonepayPlus. A key plank of a raft of innovations is a new public register for premium line operators. There will be big changes to the PPP Code as well and PRS providers will need to have robust and effective complaint handling procedures firmly in place. Anna Williams reports.
When: 7 January 2011
Where: United Kingdom
Law stated as at: 7 February 2011
PhonepayPlus (PPP), the regulator of premium-rate service (PRS), intends that its new Code of Practice shall be published during the first quarter of 2011. Before this is possible, Ofcom and the European Commission must first approve the Code. Two of the major changes to appear within the next Code shall be the imposition of responsibility for Code compliance onto the party that controls a PRS and a new registration scheme that should lead to greater transparency as to the parties involved in the provision of PRS.
Back in April 2010, PPP published a consultation document discussing its proposed new registration scheme. It was clear that the scheme would involve the creation of a database of PRS providers and it was intended to assist the PRS industry to carry out due diligence on parties within the value chain to assess their Code compliance and assess the risks of doing business with them. Of course such a database shall also enable PPP and Ofcom to keep an eye on frequent infringers and enforce regulatory compliance. PPP wants it to also be easier for consumers to contact the customer services team of the provider of their PRS. PPP has therefore been spending a lot of time thinking about how the registration scheme shall function effectively and in January it issued an update to inform the PRS market how it intends to establish the registration scheme.
The update published focuses on who will need to register with the new PPP scheme, the costs of registration and when registration shall become compulsory. It is not the final word on the matter, however, as PPP intends to consult further with key stakeholders and then issue further clarification in another update to the industry which is scheduled for some time in February or March 2011. For now therefore, we look at the key guidance provided by PPP in this latest document but the whole picture is not yet available:
1. When will the scheme become active?
It is intended that the new scheme will commence with a 'pre-registration' phase during which time the bulk of the new database of PRS providers shall be populated. It is PPP's intention that the scheme shall be fully operational from the first day on which the new Code of Practice is effective. There are no clear dates provided yet but PPP intends to co-ordinate the publication of the new Code, its date of enforcement and the pre-registration period for the registration scheme so that players in the PRS market will have "every reasonable opportunity" to register with the scheme when it comes into play. PPP hopes the new Code would have received approval from Ofcom and the European Commission by the end of March 2011 and so hopes to provide more definite timelines when it publishes its next update.
2. Who will be required to register?
PPP's new Code of Practice shall state that nobody is to operate a PRS without being registered. Furthermore, nobody must do PRS business of any kind with any other organisation unless that organisation is registered with PPP. The whole of the PRS value chain will therefore be affected in one way or another by the new registration scheme. By way of example of what registration is likely to involve, companies shall have to provide information relating to their registered name and number, their country of incorporation, the date they were incorporated, their trading names (past and present), an address for receiving instructions and a contact number and email for regulatory matters. Similar requirements also exist for sole traders and partnerships.
Each and every PRS service will need to be registered with the new scheme within 48 hours of being activated. The provider responsible for customer service will have the responsibility for ensuring a particular service is registered and all information relating to that service is up-to-date. The access number for the service shall have to be provided, together with a link to the registration of the organisation providing customer care for that service and a customer care number. PPP has recognised that some organisations will also want to go one step further to provide consumers with information about their services so as to reduce the need for them to approach the PRS provider for information. PPP shall therefore enable registering organisations to provide further service information on a voluntary basis and this shall include information concerning the charging mechanic associated with the service, the type of service concerned and information describing the service and how further enquiries can be made. Any party involved with a service can register information about it and each time the database is updated where an individual service is concerned, an email will be sent to the regulatory contact at the relevant provider for that service and they shall have the opportunity to amend or dispute the changes to the database if they are not correct.
PPP received a large number of responses as part of its consultation process when it queried whether any particular services or entities should be made exempt from the registration requirements in any way. It has indicated it is now considering such submissions and it will update the industry in due course as to whether any services or entities are either exempt from registration in its entirety or shall be required to register but shall not need to pay the registration fee.
3. What shall happen in the event of breaches of the Code of Practice?
PPP has indicated that one of its key objectives is to raise awareness within the industry of those who "consistently cause harm in the PRS market". PPP shall therefore match information of individuals who are behind breaches of the Code to their new organisation's records so that future potential business partners will be aware of their previous track record for Code compliance. During the registration process, details shall therefore have to be provided as to the full names, dates of birth and email addresses of directors. It is easy to see how third parties could be put off from doing business with a company who employs a director who previously breached the Code. Individuals could therefore also find their job-hunting activities are affected if they have ever been responsible for a Code breach in a previous professional life. Perhaps more of an incentive to ensure Code compliance going forward!
4. Who can use the new scheme database?
Concerns were raised to PPP that the new registration scheme could be used by third parties as a tool to gather marketing data about the PRS industry. Although the database is likely to only hold information that is publically available, it is now intended that only entities who register as part of the scheme can use the database to search its records. PPP shall also keep one eye on the database to ensure it is not abused and any improper use of the database shall constitute a breach of the Code of Practice.
Registrants shall also be able to conduct due diligence searches and have reports created within the database regarding their filing history and the history of others they are considering doing business with. However, PPP has warned that this function of the database shall not act as a "get out of jail free" card for players in the PRS market. In the face of a Code breach allegation, companies must be able to show that they not only checked whether their partners were registered with the scheme but that they also "…took a risk-based response using information from their due diligence search and have ongoing reasonable risk and control measures in place".
5. How much will registration cost?
The new registration scheme will initially be funded from cash reserves held by PPP. It is PPP's aim that the scheme will then become self-funding over time through the registration fees that shall be charged. Once PPP recovers the initial set-up costs of the scheme (expected to be around £650,000), from the registration fees to be charged, the benefit of other fees received shall then be "returned to industry". However, PPP isn’t yet clear how this shall be achieved and so it is consulting on this point with stakeholders and funders at present.
Based on current forecasts as to the likely number of companies that shall have to be registrants of the new scheme, PPP predicts that the registration fees payable for the first year of the scheme shall be £100 plus VAT. This fee shall be collected online using major debit and credit cards. It is possible that the registration fee may then change in subsequent years dependant upon the number of companies that will need to register with the scheme and the outcome of annual PPP Business Plan consultations.
Why this matters:
Change is certainly afoot in the PRS market but as this latest note published by PPP shows, a lot of the details have still not been finalised. We are still awaiting the publication of the new Code of Practice and the outcome of decisions as to which entities or services (if any) shall be exempt from the registration scheme so we must await the publication of PPP's next update later this month or next month to find out more. By then it is hoped that there shall be more concrete news as to date the scheme shall come into force and what the actual costs and compliance obligations of the scheme for players in the PRS market shall be. So its still "watch this space" for a little while longer…