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Complainant: Ofcom own-initiative investigation
Investigation against: Communications Providers who provide fixed-line telecommunications services and engage in sales and marketing activity
Case opened: 29 May 2007
Issue: Compliance with the requirement to establish and comply with a code of practice for sales and marketing and the use of information obtained during the transfer process.
Relevant instrument: General Conditions 14.5 and 1.2 of the General Conditions of Entitlement and/or section 128 of the Communications Act 2003.

Update Note – 18 August 2008

A non-confidential version of the notification issued to Universal Telecom Limited under Section 94 of the Communications Act 2003 on 1 May 2008 has now been prepared and can be found at the link below.

End of update note

Update note – 27 May 2008

Ofcom has decided to continue its programme of active monitoring and enforcement for a further 6 month period. The investigation covers all types of mis-selling including:

• slamming, where a consumer is switched to another provider without their knowledge;
• when communications providers pass themselves off as other companies;
• when communications providers fail to provide important information to consumers, for example, the minimum contract duration or details of early termination fees; and
• when communications providers refuse or make it difficult for consumers to transfer to a different supplier.

Ofcom will continue to monitor actively all communications providers and the complaints it receives about them. Action will be taken if Ofcom finds evidence that a breach of the rules may have taken place.

This will include evidence in relation to the inappropriate use of the ‘Cancel Other’ facility. Clarification on the correct application of Cancel Other can be found here.

Update note – 2 May 2008

Ofcom has issued a Notification to Universal Telecom Limited (“Universal Telecom”), under section 94 of the Communications Act 2003. This Notification forms part of Ofcom’s ongoing own-initiative investigation to address conduct relating to the transfer of customers between communications providers.

Ofcom has issued guidance on the correct application of Cancel Other and this can be found here.

Ofcom considers that there are reasonable grounds for believing that since at least 1 January 2007 Universal Telecom has contravened, and is contravening, General Condition 1.2 of the General Conditions of Entitlement. Specifically:

1. Universal Telecom is a communications provider offering telephony services to end-users;
2. where an end-user arranges to transfer the provision of their telephony services from Universal Telecom to another communications provider, Universal Telecom as the ‘losing’ provider acquires information (the Calling Line Identity (“CLI”) of the transferring end-user) from another communications provider, the ‘gaining’ provider, in connection with this transfer process; and
3. Universal Telecom has used and is using this information (the CLI of the transferring end-user) which is acquired from another communications provider in connection with the provision of Carrier Pre-selection (“CPS”) and/or Wholesale Line Rental (“WLR”) or Local Loop Unbundling (“LLU”) for a purpose other than that for which that information was supplied (facilitating the transfer), namely :

• preventing the customer transfer through the unauthorised use of Cancel Other (i.e. without the customer’s express consent).

Universal Telecom has until 3 June 2008 to comply with GC 1.2 and to make representations to Ofcom about the matters contained in the Notification and Explanatory Statement.

A non-confidential version of the Notification is currently being prepared and will be published shortly.

End of update note

Update note – 4 March 2008

In response to the notification issued to The Utility Warehouse on 25 January 2008, The Utility Warehouse wrote to Ofcom setting out its proposals to comply with General Condition 1.2 and remedy the notified contraventions. The Utility Warehouse has modified its internal procedures so that it will:

1. No longer make the assumption on receipt of a request to transfer that the customer has been slammed. Orders will no longer be automatically rejected if the customer has failed to give advance notice of their intention to transfer;
2. Issue notification of transfer letters, which do not contain marketing material, to all customers seeking to transfer to another communications provider; and
3. Only apply Cancel Other where it has the express permission of the customer to do so.

A non-confidential version of the notification issued to The Utility Warehouse on 25 January 2008, under Section 94 of the Communications Act 2003, has now been prepared and can be found at the link below.

Ofcom’s industry-wide compliance monitoring programme remains ongoing and we will continue to open investigations and/or take direct enforcement action under this programme where required.

Guidance on the correct application of Cancel Other

Cancel Other is a consumer protection mechanism designed to ensure that customers are not switched without their permission. Therefore, Cancel Other should only be used in certain circumstances, in particular, where the customer believes they are a victim of slamming or mis-selling.

Cancel Other should not be used by the Losing Provider to frustrate the transfer process, particularly in situations where, for example, the customer has not yet paid their bill, the notice period has not been served or where disconnection or termination charges apply. These charges should be included in the final bill, and settled in accordance with standard payment terms.

To ensure compliance with General Condition 1.2 Ofcom expects all Communications Providers to apply Cancel Other only in the following circumstances:

1. Where a request for a fixed-line telecommunications service has been made without the customer’s express knowledge and consent (“Slamming”) or at the customer’s request, that is, in the following circumstances:
   1. where the customer confirms that they were never contacted by the gaining provider (Cancel Other code 9X50);
   2. where the customer confirms that there has been contact with the gaining provider, but they had not given the gaining provider authorisation to transfer some or all of its telephone calls and/or line rental to the gaining provider (Cancel Other code 9X20);
   3. where the customer confirms that they agreed to purchase a product or service from the gaining provider and the gaining provider has submitted a request for a different product or service which the customer has not agreed to purchase (Cancel Other code 9X70); or
   4. where the customer confirms that they agreed to transfer some or all of its telephone calls and/or line rental to the gaining provider having understood, as a result of a deliberate attempt by the gaining provider to mislead, that it is making an agreement with a different communications provider (Cancel Other code 9X60);
2. at the customers request where the customer confirms that the gaining provider has failed to cancel the request after being directed by the customer to do so (“Failure to Cancel”) (Cancel Other code 9X80);
3. where the telephone line is ceased during the transfer period (“Line Cease”) (Cancel Other code 9X40); and
4. for other specified reasons not related to a customer’s request to cancel a transfer, and agreed by the service providers forum (Cancel Other code 9X00).

End of update note

Update note – 28 January 2008

Ofcom has issued a Notification to Telecom Plus PLC, trading as The Utility Warehouse Discount Club (“The Utility Warehouse”), under section 94 of the Communications Act 2003. This Notification forms part of Ofcom’s ongoing own-initiative investigation to address conduct relating to the transfer of customers between communications providers.

Ofcom considers that there are reasonable grounds for believing that since at least 1 January 2007 The Utility Warehouse has contravened, and is contravening, General Condition 1.2 of the General Conditions of Entitlement. Specifically:

1. The Utility Warehouse is a communications provider offering telephony services to end-users;
2. where an end-user arranges to transfer the provision of their telephony services from The Utility Warehouse to another communications provider, The Utility Warehouse as the ‘losing’ provider acquires information (the Calling Line Identity (“CLI”) of the transferring end-user) from another communications provider, the ‘gaining’ provider, in connection with this transfer process; and
3. the Utility Warehouse has used and is using this information (the CLI of the transferring end-user) which is acquired from another communications provider in connection with the provision of Carrier Pre-selection (“CPS”) and/or Wholesale Line Rental (“WLR”) or Local Loop Unbundling (“LLU”) for a purpose other than that for which that information was supplied (facilitating the transfer), namely :

• preventing the customer transfer through the unauthorised use of the Cancel Other process (i.e. without the customer’s express consent).

The Utility Warehouse has until 26 February 2008 to comply with GC 1.2 and make representations to Ofcom about the matters contained in the Notification and Explanatory Statement.

A non-confidential version of the Notification is currently being prepared and will be published shortly.

End of update note

Update note – 29 November 2007

Ofcom has decided to continue its programme of active monitoring and enforcement for a further 6 month period. Ofcom will continue to collect industry data and examine any evidence which suggests that communications providers are not complying with the requirements of their Code of Practice and/or are failing to act appropriately following a request to transfer.

This will include evidence in relation to inappropriate use of the ‘Cancel Other’ facility. Cancel Other is a function that enables losing communications providers to cancel a request for transfer but only where consumers are the victims of slamming. Ofcom will open investigations and/or take direct enforcement action under this programme where required.

End of update note

On 21 May 2007 and following public consultation, Ofcom published a statement confirming its decision to retain the obligations on communications providers to establish, and comply with, codes of practice for sales and marketing activity in accordance with published Ofcom guidelines. Ofcom is also extending the obligations to cover services offered on full Local Loop Unbundling.

This investigation will be a programme to actively monitor compliance in the industry with amended General Condition 14.5 and respond swiftly and effectively to any failure to comply

Ofcom will also monitor the behaviour by providers upon receipt of a consumer’s intention to transfer to another provider. Ofcom has previously stated that ‘losing’ communications providers would be in breach of General Condition 1.2 if they used information obtained from BT during the transfer process to engage in marketing activity to try to retain the customer.

The information received by the losing provider during the process to transfer lines is supplied for the purposes of enabling the transfer to take place and for ensuring that certain consumer protection measures are carried out. In this respect, losing providers must send ‘notification of transfer’ letters to customers which do not contain any marketing material. Any telephone contact made with the customer during the transfer process must be strictly limited to verifying that the customer agrees to the transfer and, again, not contain any marketing content.

Ofcom will therefore also consider as part of this investigation whether losing providers are acting appropriately during the switchover period.

Case Leader: Ian Vaughan (020 7783 4331 e-mail: Ian.Vaughan@ofcom.org.uk)
Case Reference: CW/00960/05/07

• Notification of Contravention of General Condition 1.2 under section 94 of the Communications Act 2003 [pdf]
  Notice served Universal Telecom Ltd (“Universal Telecom”)
• Notification of Contravention of General Condition 1.2 under Section 94 of the Communications Act 2003 [pdf]
  Notice served on Telecom Plus plc trading as The Utility Warehouse Discount Club (“The Utility Warehouse”)

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