PhonepayPlus has announced it plans to tear up its existing Code of Practice and start afresh with a simpler, more effective code. With potential changes to the regulation of premium rate services such as a registration scheme and new liability for premium rate service operators, big changes look to be afoot. Anna Williams takes a look at the current consultation exercise just launched
When: 29 April 2010
Where: United Kingdom
Law stated as at: 24 May 2010
PhonepayPlus, the regulator of premium rate phone-paid services, has noted the industry feedback it has received the last couple of years and has decided the current Code of Practice regulating premium rate services ("PRS") is in need of major revision. The type of feedback PhonepayPlus would often receive was that the current Code of Practice (which is the 11th edition of the Code) could be more clearly and simply expressed, with a less prescriptive set of rules that could be more easily adapted to new services or billing mechanics created from time to time.
One of PhonepayPlus' goals as the day-to-day regulator of PRS is that everyone should be able to use PRS with absolute confidence and so in the past, PhonepayPlus has regularly monitored the effectiveness of its Code and consulted on revisions to it when the PRS sector has developed in some way. PhonepayPlus has now decided that as new PRS technology and products are coming onto the market at a faster than ever pace, what is now needed is a regulatory regime that can quickly assess the potential risks and benefits of such new technology and services and govern it accordingly. PhonepayPlus has therefore "stripped-down and simplified" its Code and has launched a consultation process to assess its new approach and to get the new Code really to govern a new era of PRS.
How does the proposed Code differ from the current one?
Rather than simply revising the current Code, PhonepayPlus has started from scratch and created an entirely new Code which it says is based on "the outcomes that consumers expect when they purchase a service, such as pricing and service transparency, fairness and a simple process when they encounter a problem". PhonepayPlus' aim is that a more outcomes-based Code with simple rules will give clearer direction to PRS providers and make PRS regulation more flexible and adaptable. PhonepayPlus have stressed how they want to keep the best interests of consumers at the centre of PRS regulation at all times so that their interests are not affected by the fast-moving, technology-based market PRS operates within.
Two of the proposed changes to the current PRS regulatory regime which are proposed by the new Code and are worthy of particular note are:
- the new Code seeks to place responsibility for compliance on the entities that actually operate and promote PRS, while emphasising the due diligence and risk assessment duties of other businesses who help deliver such services to the end-consumers; and
- an industry 'Registration Scheme' will be introduced which will require all networks and providers involved in PRS to register their companies and services with PhonepayPlus before they can do business in the UK.
Where the adaptation of the proposed new Registration Scheme is concerned, transparency is the key aim here. PhonepayPlus hopes the operation of such a scheme will arm consumers with more helpful information regarding the services they have bought or are considering buying, and PhonepayPlus will also be able to "shine a light on rogue providers". It is also intended that the scheme will enable players within the PRS industry to make better informed decisions as to which businesses they partner with to provide PRS to consumers going forward.
By placing responsibility for Code compliance on those who actually operate PRS services, rather than just the network operators, PhonepayPlus hopes this would enable it to quickly and directly target those responsible for causing consumer harm. Networks and aggregators will still have a duty to conduct due diligence into the businesses they contract with for PRS but it will be the party that controls the PRS service in question that will now have explicit responsibility to comply with the proposed Code.
For a comprehensive guide of the main changes between the current Code and the proposed new Code, PhonepayPlus has created a comparison table which can be viewed here.
What is likely to happen next?
As part of the consultation exercise, PhonepayPlus seeks the responses of both consumers and industry stakeholders to its proposed new Code. The consultation process will be open until 8 July 2010 and Ofcom is inviting comments on whether it should approve the draft new Code.
To provide clarity as to how the new Code will be enforced, PhonepayPlus is also currently drafting a suite of guidance notes which will sit alongside the Code. These notes will provide both general guidance on topics such as due diligence and risk assessment that should be conducted in relation to PRS services, and also guidance which is more service-specific and relates to practices for achieving compliance with the Code where certain services are concerned. By having such guidance separate to the Code, PhonepayPlus' aim is that the guidance can be updated more frequently than the Code and therefore it can ensure that the general regulatory regime can stay up-to-date more easily and quickly through amending the guidance notes as required rather than tackling large Code revisions. It is worth noting that all these guidance notes will be non-binding so PRS providers will be able to adopt different working practices if they wish, provided always that their PRS services meet the various consumer aims stated within the new Code. These consumer aims will be the ultimate test PhonepayPlus applies in the event of receiving complaints.
Some early drafts of these guidance notes have been made available on PhonepayPlus' website for illustration purposes only at this stage. They have been made available so that those participating in the consultation process relating to the new Code can see what form the guidance notes could take. Once the guidance notes have been finalised, PhonepayPlus intends to launch a further public consultation process which shall focus on these notes separately. In terms of timings, PhonepayPlus has indicated that this further process should take place later in 2010.
Why this matters:
Those involved in the PRS market should assess and feed into the new Code PhonepayPlus hopes shall provide a more "future-proof" regulatory framework. It is important that companies involved with the operation and provision of PRS services are aware of the fact that they shall be responsible for complying with this new Code going forward and will therefore be held to account directly for any breaches. If stakeholders don’t like the prospect of having to register to be able to enter into contracts with other registered businesses to deliver PRS in the UK market, now is the time to let PhonepayPlus now before we see such practices coming into force.
The consultation paperwork can be accessed through the weblink which also provides links to all other PhonepayPlus consultation exercises in progress at present. Until July 2010, we will all watch this space to see if PhonepayPlus overhauls PRS regulation in the way it would like to…….
Anna Williams (née Montes)
Osborne Clarke, London