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Summary

1.1 Ofcom has statutory duty under Section 54(4) of the Communications Act (“the Act”) to keep under review all approved dispute resolution procedures (“ADR”). This is the first such review. The two organisations providing an ADR service, which currently have Ofcom approval are:

• Office of the Telecommunications Ombudsman (Otelo) (approved on 30 September 2003) http://www.ofcom.org.uk/static/archive/oftel/press/releases/2003/pr53_03.htm
  
• Communications and Internet Services Adjudication Scheme (CISAS) (approved on 9 November 2003) http://www.ofcom.org.uk/static/archive/oftel/press/releases/2003/pr61_03.htm
  
  collectively referred to as the ‘Schemes’.

1.2 This first review of the Schemes assesses their general effectiveness, their interaction with communications providers and Ofcom; and end user satisfaction.

1.3 The way in which communications providers handle complaints from their domestic and small business customers impacts on the effectiveness of Schemes e.g. the ADR service may be overloaded with enquiries that should be handled by the communications provider.

1.4 Ofcom’s methodology for the review has had a number of strands. It covers formal information requests by Ofcom to the Schemes and to a sample of their members; quantitative and qualitative research and comparative analysis with Ofcom’s internal data on consumer dissatisfaction.

Main findings

1.5 There has been a large increase in the number of members of ADR Schemes since they gained Ofcom’s approval in 2003. Membership of CISAS has increased from 49 to 144 and of Otelo from seven to 143. Membership covers fixed, mobile, ISPs and new voice services.

1.6 Very few complaints received by communications providers are referred to ADR. Less than half a percent of the over one million complaints received by a random sample of 50 members of the Schemes were referred to ADR during 2004. However Ofcom found that there was a lack of common understanding of what constitutes a ‘complaint’ with apparent inadequate recording and monitoring by communications providers’ front line staff.

1.7 Independent research shows that most consumers start the complaint process at the right place i.e. by complaining to the provider, but get little or no information about ADR procedures. Ofcom appears to be a popular second point of call and 40% of the consumer contacts with Ofcom during 2004 were about those companies included in the sample for the review.

1.8 The majority of complainants approaching a Scheme do so prematurely i.e. before twelve weeks have passed and/or the company has issued a deadlock letter (i.e. a statement that the provider will no longer be considering the complaint). This was mainly because consumers needed to know more about the complaints handling process and required assistance dealing with their provider. This suggests that many communications providers are failing to escalate complaints satisfactorily and keep complainants informed of progress. Only a small number of the enquiries initially received by the ADR lead to a full investigation.

1.9 Very few complainants choose to use the small claims court to settle their dispute.

1.10 The vast majority of disputes brought to ADR relate to complaints about billing and poor customer service.

1.11 Otelo handled many more enquiries than CISAS (50,206, compared with 3340) almost a third of which were outside of its terms of reference (OTOR). It also investigated many more cases (4,593 compared with 233 during 2004). During 2004 Otelo had a much lower staff: case ratio than CISAS and a backlog of cases built up. Otelo was only able to meet the six week target for resolving disputes in 15% of cases (compared with CISAS’s 85%). CISAS has an additional filter through the complaints handling service provided by ISPA. Otelo has remedied this situation and is now meeting its targets in over 80% of cases.

1.12 There is no evidence to suggest that the Schemes have any bias in favour of the companies that fund them. Over the period under review Otelo has made more decisions requiring action by the provider than has CISAS. In both schemes the average awards are relatively small and in many cases the awards are non-pecuniary. Around 80% of the decisions made are accepted by the complainant.

1.13 Ofcom found that two thirds of complainants were very dissatisfied with the way communications providers staff handled their complaints. On the basis of the verbatim comments received during the interviews there was a fairly even split between positive and negative comments about complainants’ experiences with the Schemes. However as the sample size was very small, the data must be interpreted with some caution.

Proposed recommendations for best practice

1.14 Having undertaken this review, as required under Section 54(4) of the Act, Ofcom does not intend to modify the conditions of its approval or withdraw its approval of Otelo or CISAS (Section 54(5) of the Act). However, the following proposed recommendations are made for improving best practice, both by communications providers and by the Schemes.

Recommendations for communications providers

Ofcom proposes that:

1.15 Communications providers must improve complaints handling procedures and customer awareness of ADR procedures. Communications providers must make customers aware of their complaints code of practice as soon as a complaint is received and ensure that the codes are easily accessible, ideally through the company website and/or on customer invoices.

1.16 Communications providers should record any expression of dissatisfaction with the service provided by an end user as a complaint, irrespective of the means by which the complaint was communicated and/or whether the company considers the complaint to be justified. A common approach will ensure accurate recording and monitoring of progress. Front line staff should be adequately trained in company complaints handling procedures. Communications providers should not direct enquiries to Ofcom nor prematurely to a Scheme.

Recommendations for the Schemes

Ofcom proposes that:

1.17 Schemes should take action against communications providers who fail to comply with their rules, including best practice on complaints handling and/or who fail to abide by the Schemes’ decisions. The Schemes should alert Ofcom of any potential problems that may be detrimental to consumers.

1.18 The Schemes should work with communications providers to improve awareness of the service amongst those groups currently under-represented. Schemes should monitor socio-demographics of complainants as an integral part of customer satisfaction surveys and take action to promote ADR amongst groups that are under-represented.

1.19 Schemes should publish Key Performance Indicators covering staff competence, timeliness of decision making and overall customer satisfaction. In addition the Schemes should publish regular reports showing the breakdown of complaints received.

1.20 Schemes should consider using an independent third party to handle complaints about their own processes and procedures.

Ofcom’s role

1.21 To help ensure implementation of the recommendations for communications providers, Ofcom will work with the Schemes to develop best practice for communications providers as part of the conditions of membership of the Scheme.

Next steps

1.22 This is a final report of the findings of Ofcom’s first review of ADR Schemes. Whilst the findings of the review do not lead Ofcom to conclude that it should withdraw its approval of either of the Schemes, Ofcom has proposed a number of recommendations for best practice to make the Schemes better and these are subject to consultation.

1.23 Ofcom welcomes stakeholders’ views on the proposed recommendations (summarised in paragraphs 1.15 – 1.20 above), together with any other comments they wish to make on the findings of this review, using the consultation response cover sheet in Annex 3. Responses should reach Ofcom no later than 5.00 pm on Wednesday, 5 October 2005.

1.22 Ofcom will be holding a customer service workshop for communications providers in the autumn. For further details please contact Natalie Siega at Natalie.siega@ofcom.org.uk

The full document is available below

• Ofcom Review of Alternative Dispute Resolution Schemes [pdf]
  Full print version

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