Home | Blog | Ofcom flexes its muscles on mis-selling but is it tough enough?

ShareOfcom flexes its muscles on mis-selling but is it tough enough?

The issue of mis-selling in the telecoms industry has been around for several years and for several years regulator Ofcom has been trying to tackle it. Despite regulations for fixed line telecoms providers and a Code of Practice for sales and marketing activities mis-selling remains a serious problem in the UK. Ofcom’s statistics show one in forty UK households fall victim to mis-selling every year with an estimated cost to consumers of £40million in 2008.

Neil Watson, Technical Support Manager

Neil Watson, Technical Support Manager

Now Ofcom has decided it’s time to get tough. Following an original consultation in March, last month Ofcom announced a two staged set of proposals to tackle the issue:

Stage One Proposals

  • Clarification and simplification of regulations and, particularly, moving away from a Code of Practice approach to absolute prohibitions within General Conditions (GCs);
  • Extending Cancel Other rules to all providers [and withdrawing BT’s Cancel Other Direction]; and
  • Clarifying record keeping obligations.


Stage Two Proposals
(requiring further analysis and consultation)

  • Information to consumers on the potential consequences of switching; and
  • Mandatory call recording obligations.

So, what exactly is mis-selling?

Ofcom describes the following instances as mis-selling:

  • Providing false and/or misleading information
  • Applying unacceptable pressure on the customer to change provider e.g. threatening behaviour
  • Slamming – where customers are switched to an alternative provider without their knowledge or consent. This can include passing off (where the representative claims to be from a company they are not actually from), obtaining customers’ signatures under false pretences and even forging customers’ signatures.

Following the opening of the consultation BT teamed up with the Trading Standards Institution (TSI) to develop a 5 step help guide to help consumers guard themselves against mis-selling along with some useful advice on what to do if you become a victim of mis-selling including a summary of consumers’ rights.

Additionally the pair have proposed an alternative PIN based process for moving providers in an attempt to help tackle the problem. The system would involve the customer requesting a PIN from their existing provider when they wish to move to a new provider and the move would only be authorised through the use of this PIN, similar to the MAC (Migration Authorisation Code) process used for transferring broadband connections between providers.  The idea is that by obtaining the PIN the consumer has clearly stated their request to move providers.

Whilst I agree with BT and the TSI that this PIN system is likely to minimise the amount of blatant opportunistic mis-selling I don’t believe that this alone will be enough to tackle the harder faced offenders.  Even the similar MAC process for broadband can and has been abused. There have been cases of slamming reported where the MAC has been fraudulently obtained without the customer’s knowledge.

What we really need to tackle this problem is enforcement! The Ofcom proposals (in particular their move away from a code of practice in favour of absolute prohibition) and BT’s and the TSI’s PIN system are a good start but the proposals will only be effective if they are enforced. In the past Ofcom has been accused of being a ‘toothless tiger’,  this is the perfect opportunity for them to prove their critics wrong and step up to the mark by actively hunting down the offenders and enforcing their new powers to their full potential.

As a voice and data communications provider we are fully aware of this issue and the unnecessary stress it can cause its victims and therefore support any proposals that can help to stop mis-selling within our industry. We applaud BT and the TSI for bringing this to the attention of the public and for their development of a help guide but I believe the fight will only be won through proactive enforcement by Ofcom.

We look forward to seeing the detail of Ofcom’s proposals.

Have your say!

Have you or any of your customers fell victim to mis-selling? How do you think Ofcom should tackle the problem? Let us know your thoughts on this issue by leaving us a comment below.

Further information

Share this article:
Share

Rate our article...

Sorry, comments for this entry are closed at this time.