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22|11|04

Ofcom to strengthen consumer safeguards in fixed-line telecoms

Ofcom today announced measures to increase consumer protection from mis-selling in fixed-line telecoms services.

After an extensive public consultation which began on 29 April 2004, Ofcom has concluded, in line with a majority of responses to the consultation, that the existing voluntary guidelines on sales and marketing should become mandatory. All fixed-line service providers will be required to draw up Codes of Practice consistent with the guidelines and comply with them.

Section 3 of the Communications Act 2003 requires Ofcom to further the interests of consumers in relevant markets with particular regard to choice, price, quality of service and value for money.

UK consumers benefit from a competitive market for fixed-line telecoms which increasingly offers them lower prices and more choice. Competing services are offered to customers via a number of different marketing channels, including direct mail, telesales, and doorstep selling. However, there is also the potential, under certain circumstances, for abuse of these channels.

The term mis-selling describes a range of sales and marketing activities which are not fully transparent and / or are intended to mislead and therefore work against consumers' interests. In particular mis-selling includes so-called slamming, where consumers are switched from one supplier to another without their knowledge and consent.

The large majority of respondents to Ofcom's consultation earlier this year were in favour of further measures to improve consumer protection in this area. Enforceable Codes of Practice on sales and marketing will provide Ofcom with effective powers to take action against companies who are found to engage in irresponsible sales and marketing practices.

Ofcom will investigate allegations of mis-selling on a case by case basis, in line with its published complaints and disputes guidelines. Ofcom's enforcement powers will include securing written undertakings from companies about their sales and marketing practices, and ultimately the power to fine companies up to 10 per cent of turnover.

Ofcom is proposing that the obligation to comply with sales and marketing Codes of Practice should last for two years. The obligation will then be reviewed, and re-instated if there is evidence to support a continuing need for the additional consumer protection.

Separately, Ofcom also published today proposals to resolve a dispute between BT and a number of other communications providers about the functionality known as ‘Cancel Other'.

Cancel Other enables BT to cancel orders for Carrier Pre-Selection (CPS) and Wholesale Line Rental (WLR) within a 10-day transfer period. BT is only permitted to use Cancel Other in certain circumstances, in particular where an order has been placed without a customer's knowledge or consent.  

Ofcom is proposing that BT should retain the Cancel Other function, primarily as a continuing form of consumer protection. However Ofcom is also seeking views on proposals that BT's use of the function should be more tightly defined, and that BT should be required to provide more detailed information to other providers on its use of Cancel Other. The closing date for responses to Ofcom's Cancel Other consultation is 23 December 2004 .

Both documents published today are available on Ofcom's website - see Related Items.

Ends.

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