Slamming crackdown

Ofcom has unveiled new measures to protect consumers from falling victim to both landline and mobile phone mis-selling.

The term `mis-selling’ covers a range of dodgy sales and marketing activities including slamming.

Slamming involves switching a consumer to another telephone provider without their knowledge or permission.

Often the first they know they’ve been slammed is when they receive a bill from a new company out of the blue.

Complaints

Over the past year Ofcom received almost 1000 complaints a month about slamming, making it the most complained about landline issue.

So today we’re publishing proposals to stamp out this and other forms of fixed-line mis-selling.

At the same time we’re also introducing new rules to stop misleading sales practices in the mobile phone market.

Both the proposals for the fixed line sector and the new rules for the mobile sector are designed to protect consumers.

They’ll also enable Ofcom to take quicker and more effective action against communications providers that break the rules.

Proposed new rules for the fixed line market

Call recordings – Communications providers would have to keep better records, including voice recordings of all telephone conversations relating to sales. Better quality records will help Ofcom take enforcement action against providers that are engaging in mis-selling and make this action more effective.

Explicit regulations – Ofcom proposes to simplify the regulations by explicitly banning mis-selling under the General Conditions – a set of rules that all communications providers have to adhere to. Communications providers breaking the rules could ultimately be fined up to 10 per cent of relevant turnover.

Clearer consumer advice – Communications providers would have to give better information to consumers by reminding them that there may be consequences from switching, such as possible termination charges for leaving a contract early.

We believe that if implemented, these proposals would substantially reduce the levels of complaints about fixed-line mis-selling.

Mobile mis-selling

The mobile network operators introduced a voluntary Code of Practice in July 2007 to tackle mis-selling and cashback issues.

This failed to lead to a significant reduction in complaints and so last March Ofcom proposed new mandatory rules – called a General Condition.

Complaints to Ofcom about mobile cashback subsequently fell from 400 per month in early 2008 to 28 last December.

But we’re still receiving around 200 complaints a month about general mobile phone mis-selling.

That’s why we’ve now decided to introduce new rules to provide consumers with better protection.

The rules state that providers must:

• not engage in dishonest, misleading or deceptive conduct and put provisions in place to ensure that those selling their products and services similarly do not mis-sell;
• make sure the customer intends and is authorised to enter into a contract;
• make sure consumers get the information they need at the point of sale;
• make sure that the terms and conditions of cash back deals offered by their retailers are not unduly restrictive; and
• carry out certain due diligence checks in respect of their retailers.

The new rules will come into force in September and providers who breach the rules could be fined up to 10 per cent of relevant turnover.

Ofcom Chief Executive, Ed Richards said `Ofcom wants to stamp out mis-selling in the telecoms market so that consumers can get the best that competition brings.

`Our announcements are designed to tackle misleading sales practices in landline and mobile services.’

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