Developing a Telecommunications Ombudsman
Consultation document issued by the Director General of Telecommunications

March 2001

Contents

Executive summary

Chapter 5 Value of dispute and enforcement of the Ombudsman’s decision

Chapter 6 Funding of the Ombudsman scheme

Chapter 9 Interaction of the Ombudsman with other organisations

Annex 2 The Seven Principles of Public Life

Executive summary

S.1 Under the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 (SI 1998 No. 1580) (the ‘RVTD Regulations’), which implemented the Revised Voice Telephony Directive (Directive 98/10/EC) (RVTD), the Director General is required to ensure that "fair, transparent, accessible, timely and inexpensive procedures are in place to address disputes between users and operators providing either a fixed public telephone service and/or a fixed public telephone network." Under the RVTD Regulations the Director General can appoint a third party to resolve such disputes.

S.2 The objective of this consultation is to explore the practicalities and feasibility of setting up an Ombudsman scheme, which Oftel believes will meet its requirements under the RVTD Regulations when appointing a third party to resolve such disputes. It is intended that the core scheme, in which participation would be compulsory for all licenced operators and systemless service providers of fixed public telephony networks or services, would be sufficiently flexible to facilitate expansion of the scheme on a voluntary basis with the scope to include other services.

S.3 Oftel believes that a voluntary scheme would be in line with the expectations of the Communications White Paper A New Future for Telecommunications, published in December 2000; and with best practice in a range of consumer service industries. Oftel believes that the establishment of an Ombudsman would command wide support and confidence amongst the public, whilst ensuring that disputes are dealt with fairly for all parties. Oftel further believes that the presence of an Ombudsman would give operators greater incentive to improve customer care and their own complaint handling. The ‘hallmark’ of Ombudsman membership would indicate to consumers that their operator/provider was a reputable organisation. Oftel considers that these advantages are so great that there is merit in encouraging wider membership of the scheme.

S.4 The core scheme would cover disputes regarding fixed voice telephony, fax and dial-up Internet access between licenced operators and/or systemless service providers providing a fixed public telephone network and/or a fixed public telephone service and users of that service. It would cover, in particular, cases where users are in dispute with an organisation over their telephone bills, or over the terms and conditions under which telephone services are provided.

S.5 The attraction of a voluntary scheme which extends beyond the core areas is that the consumer would receive a seamless service. Consumers would not be aware of any distinction between what was covered by the RVTD and what was not. Such a voluntary arrangement would cover all relevant disputes with fixed and mobile operators, and Internet Service Providers (ISPs), who were members of the scheme. This would avoid confusion from a consumer’s perspective. It would also benefit operators and service providers, who would be able to influence both the framework and the mechanism for funding. There are also likely to be gains in terms of consumer confidence and satisfaction. It would demonstrate a forward-looking approach in anticipation of the passage of the Communications Bill and the implementation of the draft EU Directive on universal service and users’ rights.

S.6 The key criteria which an Ombudsman scheme would need to satisfy are: independence, effectiveness, fairness, and public accountability.

S.7 It is envisaged that the Ombudsman scheme would be governed by a Governing Board comprising ‘public interest’ members. It may also be prudent to have a separate mechanism in place for overseeing the finances of the Ombudsman service and this might be undertaken by a Finance Board comprising industry members. The Ombudsman would be publicly accountable and be required to proceed fairly and in accordance with the administrative law principles of fairness and natural justice, and the provisions of the Human Rights Act 1998.

S.8 Oftel proposes that the Ombudsman scheme could provide a two-fold system to resolve disputes:

• initial, informal facilitation in order to resolve disputes as expeditiously as possible; and, where this fails,
• an alternative dispute resolution service with the powers of investigation/awarding compensation.

S.9 The intention is to ensure that access to the Ombudsman service is universally available, with complaints logged by telephone, post or via the Ombudsman’s website, by e-mail or in person. It is envisaged that Oftel’s Consumer Representation Section (CRS) would act as a ‘signpost’ to Ombudsman service to the consumer. The consumer will need to have exhausted all of the company’s internal complaints procedures prior to approaching the Ombudsman.

S.10 As well as resolving disputes, it is envisaged that the Ombudsman would have the power to award compensation. The obligation on members to comply with the Ombudsman’s decision would be through the Articles of Association of the company, set up as the Scheme Operator. The aim is to adopt an informal approach wherever possible to avoid any unnecessary delay in the resolution of disputes. However Oftel would have fallback powers for cases under the RVTD Regulations.

S.11 In order to avoid industry providers and/or large businesses using the Ombudsman as a strategic measure, it is proposed that there be a ceiling of £5,000 on the maximum monetary value of a dispute that the Ombudsman would be prepared to handle, subject to the Ombudsman’s discretion. There would be no minimum value limit.

S.12 As well as resolving disputes, it is envisaged that the Ombudsman would have the power to award compensation. Oftel suggests that any financial award would be subject to a maximum limit, to be decided by the Governing Board, but otherwise the discretion would lie fully with the Ombudsman. The Ombudsman would not make an award against the consumer.

S.13 It is proposed that the Ombudsman’s decision would be binding on the operator/service provider, provided the complainant had accepted it, but it could not be binding on the complainant. If the decision were to be binding on both parties, it could be argued that a statutory tribunal was being created. It is proposed that an Arbitrator be appointed on a case-by-case basis, by mutual agreement between the Ombudsman and the Governing Board, to resolve any differences that may arise between the Ombudsman, and a member of the scheme.

S.14 The mechanism for funding the Ombudsman scheme should be as simple, transparent and equitable as possible. Oftel may consider recovering the costs of the core scheme through the licence fee but would prefer to consider alternatives for both the core and the voluntary scheme. There are many options which may be considered, including: splitting the costs between a general levy and a case fee, spread across all members of the scheme; or to finance all costs through a general levy; or all through case fees.

S.15 There are also many ways in which the costs of the scheme could be apportioned between members, including: according to market share, or in accordance with the ‘member pays’ principle (ie members who have generated the most complaints would pay for a greater proportion of the costs).

S.16 Whichever approach is adopted, the challenge is to ensure that the costs of the scheme are allocated as equitably as is feasible.

S.17 By treating all consumers as individuals and removing barriers that could adversely affect consumers’ ability to use the scheme, the Ombudsman should aim to ensure equality of access for all. This will require careful consideration of the needs of disabled people, ethnic minorities, consumers with learning difficulties, etc. Based on the experience of other Ombudsman schemes, it is unlikely that the costs of accessibility would be prohibitive. The most practicable to customers with individual needs is likely to be to outsource the services required.

1.1 In September 1999, Often issued a Consultation Document covering the requirements of the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 (SI 1998 No. 1580) (‘the RVTD Regulations’) The Regulations implemented the Revised Voice Telephony Directive (Directive 98/10/EC) (RVTD). The Oftel document consulted on suggested ways to resolve a dispute, in accordance with the RVTD Regulations, between operators or service providers, on the one hand, and between consumers and their operator/ service provider on the other.

1.2 In that document, Oftel considered the two main approaches to resolving disputes, other than by the parties taking legal action in the courts: arbitration and alternative dispute resolution. At that time, the Government had announced its proposals to allocate to Consumer Councils the task of handling consumer complaints against utility companies where such complaints had not been resolved satisfactorily. These proposals were set out in the White Paper, A Fair Deal for Consumers: Modernising the Framework for Utility Regulation: Consumer Councils, the Response to the Consultation, April 1999. Oftel, therefore, envisaged that the scheme for resolving disputes between consumers and operators/service providers would be superceded by a Telecommunications Consumer Council. However, the scope of the subsequent Utilities Act did not include telecommunications.

1.3 As a consequence of the consultation, Oftel issued a statement covering the resolution of disputes between fixed public operators or fixed systemless service providers, which are also operators having Significant Market Power (SMP), (the Statement). (The SMP test is set out in various European Directives, including the Interconnection Directive (Directive 97/33/EC) (ICD), Art. 4(2), the Leased Lines Directive (Directive 92/44/EEC) (LLD) and the RVTD).

1.4 The Statement, entitled Resolving Disputes between Fixed Telecommunications Service Operators, is available on Oftel’s website at www.oftel.gov.uk/consumer/disp0900.htm. In the Statement, Oftel concluded that, given its experience in dealing with complaints on other but related issues, it was also appropriate for it, rather than a third party, to investigate and determine these types of dispute. Oftel also concluded that it would only investigate disputes concerning services made available by operators with SMP to providers of fixed public telephone systems or services.

1.5 With regard to the resolution of disputes between consumers and operators/service providers, responses to the consultation were mixed. For example, some respondents believed that Regulation 37 of the RVTD Regulations did not imply a need to legislate for a new layer of dispute resolution (which would oust other schemes). Oftel’s role should be to ensure that existing schemes were fit for purpose, and if not, to ensure that disputes were brought to Oftel’s attention through its Compliance Directorate and/or Consumer Representation Section (CRS). Others believed arbitration to be inappropriate, time consuming, expensive and inaccessible. Respondents who favoured an Ombudsman scheme argued that such a scheme would be more appropriate. Reasons given included:

• an Ombudsman would be able to carry out his or her own investigation in order to get at the full facts of the case, including requiring a company to provide documentation or evidence that may bear on the case;

• Ombudsman schemes allow for mediation and conciliation, where arbitration does not;

• there would be no requirement for a minimum fixed fee (Ombudsman schemes are free to the consumer) and the Ombudsman would have all necessary powers to rule out frivolous and/or vexatious claims;

• all statute-based schemes in the United Kingdom for resolving consumer disputes are based on the Ombudsman model, and none use arbitration; and,

• the existence of an Ombudsman scheme would give companies greater incentive to avoid disputes arising and to improve complaints handling.

1.6 Under the RVTD Regulations, the Director General of Telecommunications (Director General) is required to ensure that procedures exist, to resolve disputes brought to him under the RVTD, that are fair, transparent, easily accessible and inexpensive and which do not involve any unnecessary delay. The RVTD Regulations apply to all operators and service providers providing fixed public telephone networks and/or fixed public telephone services. Having carefully considered the responses to the consultation and discussions at subsequent workshops, Oftel decided to explore further the practicalities and the feasibility of setting up an Ombudsman scheme, which it believes will meet its requirements under the RVTD Regulations.

1.7 Despite the lack of clear consensus on the most appropriate form of dispute resolution, industry has been receptive to alternative proposals and has demonstrated its commitment to working with Oftel and consumer groups to devise a suitable scheme. Following a series of workshops to discuss the way forward, hosted by Oftel, an Oftel-chaired working group was set up in September 2000. The working group comprised representatives from BT, the Operators Group (OG), the Association of Communications Service Providers (ACSP), formerly known as the Service Providers Industry Group (SPIG), consumer groups, the territorial Advisory Committees on Telecommunications (ACTs) and the Advisory Committee on Telecommunications for Disabled and Elderly People (DIEL) and observers from Internet Service Providers Association (ISPA) and the Independent Committee for the Supervision of Standards and Telephone Information Services (ICSTIS). The group, chaired by Oftel, was tasked with considering the practicalities and feasibility of setting up an Ombudsman scheme. This consultation paper is based on the work of that group. It sets out Oftel’s proposals and seeks views and comments, particularly on the specific questions set out in chapter 10.

1.8  Oftel believes that an Ombudsman scheme would command wide support and confidence amongst the public, whilst ensuring that disputes are dealt with fairly for all parties. Oftel further believes that the presence of an Ombudsman would give operators greater incentive to improve customer care and their own complaint handling. Oftel considers that these advantages are so great that there is merit in encouraging wider membership of the scheme on a voluntary basis with the scope to include other services.

1.9 The White Paper, A New Future for Communications, published in December 2000, announced the creation of a single regulatory body for the communications and media industries – an Office of Communications (OFCOM). OFCOM will cover telecommunications, television and radio. Its remit will extend to both content and communications networks. It is proposed that as part of its principal duty to protect the interests of consumers, OFCOM will be required to put in place an industry sponsored Ombudsman scheme, or some equivalent mechanism, to resolve disputes related to complaints about service standards. OFCOM will also have a duty to keep markets or sectors under review and roll back regulation promptly where increasing competition renders it unnecessary. It will encourage co-regulation and self-regulation where these will best achieve the regulatory objectives.

1.10 Most importantly, the White Paper challenges the industry to come forward "with effective means of redress where service standards are not being met" (7.4.3). OFCOM is required to ensure that "there is an effective and accessible machinery for consumer redress, in the form of an Ombudsman or something similar, if action by the industry does not meet this need". It is, therefore, in the interest of all operators and service providers to put in place a scheme that will meet this requirement.

1.11 It is within this framework that this consultation is taking place. Whilst the initial objective is to agree a suitable scheme that meets the requirements of the RVTD, the scheme needs to be sufficiently flexible to allow for changes in the technological and regulatory environment. This will facilitate expansion of the scheme on a voluntary basis in preparation for the transition from Oftel to OFCOM when the scheme will need to cover all appropriate communications-related disputes.

1.12 The consultation period will commence on 15 March and end on 15 June. A public workshop will be held shortly after publication to discuss issues arising out of the consultation. Once the responses have been considered, Oftel aims to issue a Statement on 20 July setting out the proposed timetable and the details of the Ombudsman scheme. It is intended that an implementation working group, comprising Oftel, industry and consumer representatives, would be set up to oversee a project to put an Ombudsman scheme in place by April 2002.

2.1  Regulation 37 of the RVTD Regulations requires the Director General to ensure that fair, transparent, accessible, timely and inexpensive procedures are in place to address disputes between users and systemless service providers or operators providing either a fixed public telephone service and/or a fixed public telephone network.

2.2  The objectives of this consultation document are:

2.3  To consider how best the practicalities and feasibility of Oftel setting up an Ombudsman scheme and appointing that Ombudsman to resolve disputes under the RVTD Regulations (a ‘core’ scheme) can be addressed.

2.4  Subject to further discussion and responses to this consultation, to consider the extension of both the membership and scope of such a scheme on a voluntary basis in anticipation of the requirements of OFCOM (a ‘voluntary’ scheme).

Core scheme

2.5  When considering who or what would be covered in the core of the scheme, it is useful to distinguish between the type of service and the parties concerned. In some cases, the same operator may provide different services, some of which are covered by the core requirements of the scheme and others, which are not. This has the potential to cause considerable confusion for consumers. At present, Oftel is of the view that those who are not covered by the core scheme should be actively encouraged to join on a voluntary basis, with the need to achieve a seamless distinction between the statutory and voluntary schemes, insofar as the customer is concerned.

Table 1: Matrix illustrating scope of services covered by core scheme in accordance with the RVTD

2.6 Oftel’s initial view is that any party, subject to certain qualifications (as discussed later), with a complaint falling within the scope as outlined in the matrix (Table 1) would have the right to complain to the Ombudsman (provided the user had exhausted all internal complaints procedures) for the Ombudsman to resolve the dispute. This would allow, for example, users, operators, service providers, consumers or other organisations having an unresolved dispute with an organisation providing telecommunication systems or services to make such a referral.

2.7 To fall within the scope of the core scheme, the dispute would have to be with an organisation, (whether a licensed operator or a systemless service provider (SSP)), that provided a fixed public telephone, network and/or a fixed public telephone service, or with a user of such a service. Fixed public telephone networks is defined in the RVTD in reference to the ICD, as meaning the public switched telecommunications network which supports the transfer between network termination points at fixed locations of speech and 3,1 kHz bandwidth audio information. The Interconnection Directive (Directive) (ICD), and subsequently the RVTD, provides three examples of such a network: voice telephony; facsimile Group III communications, in accordance with ITU-T Recommendations in the ‘T-series’; and, voice band data transmission via modems at a rate of at least 2,400 bit/s, in accordance with ITU-T Recommendations in the ‘V-series’. Fixed public telephone service is defined in the RVTD for a publicly available telephone service (PATS) as the provision to end-users at fixed locations of a service for the originating and receiving of national and international calls.

2.8 Within the core scheme as described, the provision of services by systemless service providers (SSP) would also be covered. An SSP is, broadly, a body that provides a PATS, but that does not run a licensed telecommunications system. A PATS, broadly defined, is a service which is available to the public to purchase.

2.9 Provided that the complaint is related to one of the services defined within the scope, the Ombudsman scheme would not be a voluntary arrangement as the actions of all such organisations are covered by the RVTD Regulations.

Voluntary scheme

2.10 One of the attractions of a voluntary scheme going beyond the core areas is that there would be no need to make an arbitrary distinction between what was covered and what was not. Such a voluntary arrangement would cover all relevant disputes with fixed and mobile operators, and Internet Service Providers (ISPs), that were members of the scheme. This would avoid the inevitable confusion from a consumer’s perspective, should the scheme be confined to its core requirements. For example, an ISP that offered unmetered access and also provided the telephone bill, might or might not fall within the scope of the ‘core ‘ scheme depending upon the bundle of services offered.

2.11 There are clearly benefits to consumers of having a scheme that extends beyond the core. Equally, operators and service providers will benefit from early membership of the scheme, not least because it is an opportunity to influence both the framework and the mechanism for funding. Moreover, there are likely to be gains in terms of consumer confidence and satisfaction.

Draft EU Directive

2.12 The proposed EU Directive on universal service and users’ rights requires Member States to ensure that transparent, simple and inexpensive procedures are available for dealing with consumers’ complaints, including those involving parties in different Member States. The current draft states that Member States will be required to adopt measures to ensure that procedures are in place to enable disputes to be settled fairly and promptly, with provision for a system of reimbursement and/or compensation. This will apply not only to fixed telephony, but also to all appropriate communications-related disputes, eg Internet and Pay-TV. In addition, operators and/or service providers will be required to provide a contract which informs the consumer of the method for initiating procedures for the settlement of disputes. The Directive is still in draft form and currently being negotiated. Oftel and the UK Government strongly support these proposed provisions.

2.13 It is, therefore, envisaged that the implementation of the core scheme, the passage of the Communications Bill, the establishment of OFCOM, and the implementation of the European directives, which could inevitably broaden the scope of a core scheme, would provide the momentum for a more comprehensive service at the earliest opportunity possible.

Types of dispute which could be brought before the Ombudsman

2.14 With regard to the core scheme, Regulation 37 of the RVTD refers to procedures that apply, in particular, in cases where users are in dispute with an organisation over their telephone bills or over the terms and conditions under which telephone services are provided. By this definition, there would appear to be few examples of terms and conditions that would not be caught within the scope of the core scheme. Equally, it is envisaged that the voluntary scheme would apply to the same type of dispute as the core scheme.

2.15 However, should the complaint concern a contract term that is considered unfair, this may be better considered under the Unfair Terms in Consumer Contracts Regulations, 1999. (See Telecoms Service Contracts: Oftel Statement issued in March 2000 http://www.oftel.gov.uk/consumer/tsc0300.htm). In such circumstances, the responsibility for action would not normally fall to the Ombudsman, but to Oftel, which would consider unfair contract terms in the generic sense. Nevertheless, the Ombudsman may, at his or her discretion, consider such cases on an individual basis.

2.16 Where a service is provided to only a few customers under a bespoke contract, and where no standard terms and conditions are advertised, the dispute would not be covered by the Ombudsman scheme on the grounds that the service was not publicly available.

Cross-border disputes

2.17 It is envisaged that the Ombudsman would deal with cross-border disputes in the country in which the customer was ordinarily resident. This would apply to those complainants ordinarily resident in the United Kingdom, Isle of Man or Channel Islands (or a member of HM Armed Forces). Whilst Oftel would support the principle that the same procedures be used for cross-border disputes and for national consumer disputes, this would not be without cost. In accordance with the implementing RVTD Regulations, the consumer would have to cover its costs of bringing a complaint to the Ombudsman, but only in those very rare circumstances.

Governance and status of the Ombudsman

3.1 It is proposed that the Criteria for the Recognition of Ombudsman Offices (Schedule 1 to the Rules of the British and Irish Ombudsman Association) (the ‘BIOA Criteria,’ see Annex), will form the basic template for the rules of the proposed Telecommunications Ombudsman, and that membership would be sought of that Association.

The four key criteria, which the Ombudsman scheme would be required to meet, are:

• independence
• effectiveness,
• fairness, and
• public accountability.

3.2 There are several stages that will need to be gone through in order to set up an Ombudsman scheme. As is usual practice, the first step will be to establish a separate company as the Scheme Operator (see, for example, the Financial Services Ombudsman and the Ombudsman for Estate Agents). Members of the Scheme would agree to comply with the Articles of Associations of that company. An example of this working in practice is the Insurance Ombudsman’s Articles of Association. Members undertake to be "bound by any award and to take account of any recommendation or representation made by an Ombudsman".

3.3 The company itself would have no role whatsoever in the management of the Ombudsman.

3.4 A Governing Board comprising ‘public interest’ members, taken from industry, consumer groups and elsewhere, would govern the Ombudsman scheme. Members would be appointed under ‘Nolan principles’, as set out in the rules of the Commissioner on Public Appointments (see Annex 2).

3.5 The Governing Board would be responsible for amongst other things: the appointment of the Ombudsman; agreeing the Ombudsman’s powers; terms of appointment and remuneration; setting and monitoring performance targets; ensuring widespread public awareness of the Ombudsman scheme, its scope and powers; and, receiving the Ombudsman’s Annual Report. It would also be responsible for recommending an annual budget for the Ombudsman, (subject to the approval of the Director General and/or the Finance Board as discussed below), and determining case fee rules.

3.6 The appointment of the Ombudsman would be advertised publicly. For the core scheme, the Governing Board would recommend a suitable candidate to the Director General who would formally appoint the Ombudsman. Should the Director General wish to reject the candidate, a full and reasoned explanation would need to be given. The Governing Board would also be responsible for determining the number of caseworkers and office staff required (commensurate with the anticipated work volume) and for approving those appointments. Under no circumstances would the Governing Board be involved in any aspect of the dispute resolution process.

3.7 In order to ensure that the Ombudsman is both independent and would also be seen to be independent from those whom he/she was investigating, a number of safeguards would need to be put in place, including:

• governance through an independent Governing Board, including a majority of public interest members;
• appointment of the Ombudsman by the Director General on the Governing Board’s recommendation;
• terms of appointment as outlined in the BIOA criteria; and,
• monitoring of effectiveness.

3.8 It is suggested that the Governing Board would have a maximum of 7 members. It is proposed that appointments would be made for three years; renewable for one term; remunerable (but not pensionable). The Governing Board would be supported by a small secretariat.

3.9 It may also be prudent to have a separate mechanism in place for overseeing the finances of the Ombudsman service. It is proposed that this task could be undertaken by a Finance Board, comprised solely of industry members and appointed by the Director General. The Finance Board would be responsible for ensuring adequate funding of the Ombudsman by those subject to investigation, so that complaints could be resolved both effectively and expeditiously. This would require the Finance Board to carry out the following functions:

• receive and approve the budget prepared by the Ombudsman (and/or Chief Executive Officer) approved by the Governing Board, or received directly by the Finance Board for negotiation and/or approval;
• following consultation with the industry, agree the criteria for funding of the budget and review the criteria where necessary (eg after the initial scheme has been in place for two years); and,
• take responsibility for invoicing scheme members for the levy due and/or any other charges as necessary.

3.10 Alternatively, the responsibility for the management of the budget could lie with an appointed Chief Executive Officer, who would be accountable to the Ombudsman.

3.11 It is envisaged that in cases where there is a dispute regarding the budget and associated matters, the final decision would rest with the Director General.

Terms of Ombudsman’s appointment

3.12 It is proposed that the terms of appointment be consistent with BIOA criteria, of which the key elements would be:

• An initial appointment for three years, renewable for one or more successive periods of up to three years, preferably with retirement on rotation.

• The Ombudsman should be aged under 65 at the time of appointment and at any subsequent renewal of office.

• Under the terms of his or her appointment, the Ombudsman should be required to proceed fairly, in accordance with the principles of fairness and natural justice and the provisions of the Human Rights Act.

• The Ombudsman must be publicly accountable and there must be published procedures on how to complain about the way in which a complaint has been investigated.

• The appointment would not be subject to premature termination other than for incapacity or misconduct or other good cause. Any such recommendation would be subject to the approval of the Director General.

3.13 It is envisaged that the Ombudsman scheme will evolve to reflect the needs and expectations of telecoms consumers. In order to do so, the Ombudsman will need to put in place procedures to ensure that the effectiveness of the scheme is monitored, eg by canvassing the views of a range of different people, including consumers, whose complaints have been handled by the Ombudsman, consumers who have not used the service and people working within the telecoms industry.

Terms of reference and application of procedure

4.1 Article 26 (1) of the RVTD refers to the availability, at national level, of "easily accessible and, in principle, inexpensive procedures to resolve disputes in a fair, transparent and timely manner." It is, therefore, for Oftel to make proposals on the overall form these procedures should take as far as the core scheme is concerned; although it would be for the Ombudsman to decide on the detail. Many of the issues are common to all Ombudsmen. The model proposed is intended as a ‘strawman’ for this consultation, but it is envisaged that the Ombudsman would be able to suggest improvements and develop practice as the Office develops.

4.2 It is suggested that the Ombudsman could provide a two-fold system to resolve such disputes:

• initial, informal facilitation in order to resolve disputes as expeditiously as possible; and, where this fails,
• an alternative dispute resolution service with the powers of investigation/awarding compensation.

4.3 It has been suggested that once the dispute had been passed to the Ombudsman, the level of contact between the complainant and the operator or service provider would be as deemed necessary by the Ombudsman.

Jurisdiction

4.4 The decision whether or not a complaint falls within the jurisdiction of the Ombudsman lies with the Ombudsman. The Ombudsman would also have the ultimate authority for deciding whether or not a complaint should be investigated eg because it was vexatious or frivolous, or otherwise unreasonable.

4.5 In order for the Ombudsman to be able to consider a complaint within his or her jurisdiction, it is suggested that the following criteria would first need to be satisfied:

• The complaint would fall within the scope of the Ombudsman’s remit.

• The dispute would not already be the subject of court proceedings or a decision of any court of law (or arbitration).

• The onus would be on the complainant to satisfy the Ombudsman that the company’s internal complaint procedures had been fully complied with prior to referral.

• The complainant would normally be required to have a deadlock letter before the Ombudsman would consider the case. (Should the company refuse to provide such a letter, or appear to be unreasonably withholding it, the Ombudsman may be prepared to make an initial assessment.)

• Under normal circumstances, it is expected that the complaint would be lodged with the Ombudsman within six months of receipt of the deadlock letter and the Ombudsman would normally refuse to investigate out of time complaints.

• The dispute would not have already been referred to the Ombudsman, unless new evidence had become available.

4.6 It is essential that any procedures put in place would be fair, non-discriminatory, transparent and proportionate.

4.7 The Ombudsman would have the right to refuse to accept a complaint if he or she considered it was likely to be referred by either party to the courts or if he or she considers that it would be more appropriate for the dispute to be resolved in that way.

Oftel’s role

4.8 As part of this consultation process, Oftel wishes to make certain proposals regarding its procedural role. It is envisaged that Oftel would act as a ‘signpost’ to the Ombudsman service for the consumer. Consumers would be advised of their option to contact the Ombudsman at an appropriate time. This interaction is explained more fully in chapter 9, para. 9.7-9.10.

Ensuring ease of access to the Ombudsman

4.9 The intention is to ensure that access to the Ombudsman service is universally available. Complaints would be logged by telephone, by post or via the Ombudsman’s web-site, by e-mail or in person. Staff would, if requested, prepare an application form by phone, or via the web-site, based on the details provided and send the form to the consumer for signature. The use of consumer-tested ‘tick box’ forms and questionnaires should be considered to assist those consumers who find it difficult to describe their complaints in writing.

4.10 The Ombudsman may also wish to move away from paper-based communication where this is appropriate, eg providing digests of cases on its web-site and encourage links to relevant Internet sites.

Facilitation and conciliation

4.11 The Ombudsman would have the power to facilitate or conciliate in a dispute where he or she considered it appropriate and would not be obliged to produce a formal report on a case where such a route had been taken unless he or she believed this to be necessary.

Investigation

4.12 Should it not be possible to resolve the dispute by mediation, the Ombudsman might decide to act as investigator and adjudicator in order to determine the complaint by upholding or rejecting it wholly or in part.

Decision-making

4.13 Should negotiations fail, or are considered by the Ombudsman not to have a reasonable chance of success, the Ombudsman may make a provisional decision and allow both the complainant and the operator/service provider the opportunity to make representations. Should the Ombudsman consider it appropriate, the parties concerned would be informed of when and how they may request a hearing. In making the decision whether or not there should be a hearing, the Ombudsman will have regard to the provisions of the Human Rights Act 1998.

4.14 The Ombudsman would be responsible for making the final decision, taking into account what is fair and reasonable with regard to principles of the law, good practice and any inequitable conduct or maladministration; and for ensuring that this is communicated to the parties concerned.

4.15 In making his or her decisions, and in accordance with the BIOA rules (see Annex 1), the Ombudsman would take into account, amongst other things:

• any applicable rule of law or relevant judicial or administrative authority;

• best practice within the industry; and,

• what the Ombudsman considers to be "fair and reasonable" in the circumstances (as exemplified by any relevant industry-approved code of practice).

4.16 It is proposed that the Ombudsman’s decision would be binding on the operator/service provider through member firms signing up to the Ombudsman company’s Articles of Association. It is possible that this approach be used for both the core and voluntary parts of the scheme. However, as discussed in chapter 4, Oftel would have backstop powers to enforce that obligation with regard to the core scheme if necessary.

4.17 A decision would only be binding on the operator/service provider if it had been accepted by the complainant. The decision would not be binding on the complainant. If the decision were to be binding on both parties, it could be argued that a statutory tribunal would be being created. In Oftel’s view this would appear to be both disproportionate to the relatively small scale of the cases involved and too inflexible in relation to procedure, rules of evidence, etc. to offer a rapid and effective means of dispute resolution.

4.18 If the complainant were to reject the decision or failed to notify acceptance to the Ombudsman by the date specified the operator/service provider would not be bound by it.

4.19 As stated in para. 2.10, the Ombudsman will act in accordance with the administrative law principles of fairness and natural justice, and the provisions of the Human Rights Act 1998. In this regard, the working group has expressed concerns about the absence of a right of appeal for operators/service providers in the Ombudsman scheme. Oftel recognises these concerns and therefore proposes to follow the precedent of the Insurance Ombudsman’s scheme by suggesting that a single Arbitrator be appointed to resolve any difference that may arise between the Ombudsman and a member of the scheme. It is suggested that the Arbitrator would be appointed on a case-by-case basis by mutual agreement between the Ombudsman and the Governing Board.

4.20 An additional benefit of the Ombudsman scheme is that the decisions made are transparent. Transparency would be achieved through the regular publication of complaint statistics, together with the annual report providing feedback on noteworthy cases, subject to Data Protection issues and confidentiality. This approach helps to formulate best practice within the industry as a whole.

Access to information

4.21 Were the Ombudsman to intervene as a facilitator and/or believed an investigation was required, he or she would have the right to require access to all relevant information from both parties concerned, subject to usual disclosure rules.

Value of dispute and enforcement of the Ombudsman’s decision

5.1 The primary objective is to ensure that the Ombudsman service is seamless to consumers, irrespective of whether complaints fall within the voluntary or core part of the scheme.

5.2 As well as resolving disputes, it is envisaged that the Ombudsman would have the power to award compensation.

5.3 There will be cases where no financial award is necessary, for example, where the customer requires an apology in order to rectify the dispute. However, should the Ombudsman consider it appropriate, he or she may recommend an award be made to the consumer, which the Ombudsman regarded as a fair resolution to the dispute.

5.4 It is important that the Ombudsman scheme adopts an informal approach, wherever possible, to avoid any unnecessary delay in the resolution of disputes. Therefore, Oftel proposes that the scheme should not be a ‘legalistic’ process. Nevertheless, the members of the scheme should be legally bound by the Ombudsman’s decisions and recommendations, and there should be a reasonable expectation that these be complied with.

Value of dispute

5.5 In order to avoid industry providers and/or large businesses using the Ombudsman as a strategic measure, consideration needs to be given to the maximum monetary value of the dispute that the Ombudsman would be prepared to handle. The initial proposal is that the ceiling would be £5,000, with the Ombudsman having the discretion to examine complaints of a higher monetary value, with the agreement of the parties concerned. The sum of £5,000 has been proposed because:

• it exceeds the value of the overwhelming majority of legitimate claims by residential customers; and
• it is consistent with the limit for the small claims court.

5.6 It is proposed that there would be no minimum limit on the value of dispute that could be brought before the Ombudsman. However, the discretion whether or not to investigate any dispute would remain with the Ombudsman.

Limits to awards made to consumers

5.7 As part of his or her decision, the Ombudsman may provide for a financial award to be made to the consumer as compensation. It is suggested that any financial award would be subject to a maximum limit, determined by the Governing Board, but otherwise the discretion would lie fully with the Ombudsman. This limit need not be the same as the recommended maximum value of a dispute, which could be brought before the Ombudsman. When deciding on the award, the Ombudsman would take account of the actual financial loss incurred and what was fair and reasonable in the circumstances, having regard to: principles of law; good practice; and, to any inequitable conduct or maladministration. It may also be appropriate to take account of distress and inconvenience subject to the Ombudsman’s discretion, as is usual in many Ombudsman schemes, including the proposed Financial Services Ombudsman.

5.8 Additionally, the Ombudsman would also have the discretion to recommend an award to cover reasonable costs for out of pocket expenses. The Ombudsman would not normally recompense for legal costs and other professional expenses (eg professional reports).

5.9 It is also suggested that the Ombudsman would have the power to set time limits within which awards and costs should be made.

5.10 The Ombudsman would not recommend an award against the consumer. When deciding whether to investigate a case, the Ombudsman would take into account whether the consumer had a reasonable chance of success and also the amount of time between the dispute arising and when the consumer chose to consult the Ombudsman. In so doing the Ombudsman would recognise that should he or she find in favour of the operator/service provider, in the case of an unpaid bill the operator/service provider would subsequently need to take the consumer to court. It is believed that the experience of the Ombudsman would allow him or her to identify whether such disputes were frivolous or vexatious or had a reasonable chance of success before agreeing to investigate. Should the Ombudsman subsequently find against the consumer, he or she would make this clear in his or her decision and make a suitable recommendation, including the settlement of any outstanding balances.

Enforcement

5.11 Where the Ombudsman considered a dispute covered by the requirements of the RVTD, the Director General has powers, under Condition 32 of the Fixed PTO Licence, to enforce the Ombudsman’s decisions, given that all licenced operators are required to "take such steps as are required by [the Ombudsman]". Should the operator refuse to do so, Oftel would have the power under s16 of the Telecommunications Act 1984, (TAct) to enforce that obligation.

5.12 Although systemless service providers (SSP) would not have the same obligation under Condition 32 (as they are not licenced operators), there is a statutory duty, under the RVTD Regulations, to comply with the decision of an independent body set up by the Director to resolve such disputes. Therefore, the Director General would be able to seek an injunction against an SSP should it be in breach of its statutory duty by not complying with the Ombudsman’s decision.

5.13 However, Oftel does not wish to propose the process outlined above as the best way forward in working towards a wider scheme. Oftel suggests that the Ombudsman’s decision should be enforceable by reference to the Articles of Association of the Ombudsman company, with which all members would be required to comply as part of their ‘contractual obligation’. The Articles of Association would clearly state what is expected of members and how they should behave.

5.14 The Articles of Association would also set out the consequences of a breach of the contractual obligation in the rules. Members may be bound by the Contracts (Rights of Third Parties) Act 1999 creating rights for third parties, ie the complainant.

5.15 Members would undertake to be bound by any award and to take account of any recommendation or representation made by an Ombudsman during membership of the scheme. Should members wish to withdraw they would need to give a written period of notice, as laid down by the Ombudsman. The Ombudsman would be permitted to make an award against or a recommendation or representation to any member in relation to any complaint, dispute or claim. All such awards would be binding on the Member Company (subject to the provisions set out in paras 3.17 and 3.18 above).

5.16 It is envisaged that the powers of enforcement under the Articles of Association would apply when the Ombudsman is resolving a dispute brought under the RVTD (see para. 3.16 above).

6.1 The mechanism for funding the Ombudsman scheme should be as simple, transparent and equitable as possible. Consideration must be given both to the initial start-up costs

(eg accommodation costs, initial recruitment, etc.) and the on-going case-related and overhead costs.

6.2 It would be possible for Oftel to recover the costs of the Ombudsman from the licence fee for the core scheme, given that Oftel would be seeking to manage and/or enforce compliance with its obligations, as set out in Condition 32 of the fixed PTO Licence. Licenced operators would, therefore, be required to contribute towards the upkeep and running of the Ombudsman scheme in such circumstances.

6.3 In the case of systemless service providers, Regulation 37(2) RVTD Regulations states that when the Director General directs a third party to assist him in the resolution of disputes, the direction shall include provisions as to the payment of such a person’s reasonable costs and expenses. Oftel is of the view that this, effectively, gives the Director General the power to require each SSP who is covered by the scheme to contribute to its set-up and running costs.

6.4 Given the complexity of funding through the licence fee and the desire to simplify the workings of the scheme, Oftel proposes that other alternatives be considered, both for the core and the voluntary scheme. For example, the Financial Services Ombudsman (FSO) has proposed a 50% general levy, apportioned according to market share, with the remaining 50% based on a member pays basis, ie related to the number of individual complaints. The FSO has financed the start-up costs through a bank loan. These costs will be recouped from members as a surcharge or levy over a three-year period.

6.5 Until such time as all the parameters are known, it will not be possible to give any precise estimate of the cost of a likely scheme. For example, the larger the membership, the greater the economies of scale. Nevertheless, in order to have some idea of the likely scale of the operation for the core scheme, a useful starting point would be the volume of complaints received by Oftel’s CRS, adjusted to take account of demand not previously realised. In 2000, CRS received a total of 121,776 complaints, a 60% increase over the previous year. Analysis of the data suggests that just under two thirds of complaints received could fall within the scope of the core Ombudsman scheme, ie around 78,000 complaints. This increase needs to take into account the growth in the number of telecoms subscribers over the same period (from 55.2 million to 73.2 million) of around 75%. Experience of other Ombudsman schemes suggests that an upward trend in the number of complaints is a realistic expectation.

6.6 The experience of the Insurance Ombudsman scheme (IOB) is that, out of the total complaints received, only 0.3% eventually had their cases considered by the IOB. The experience of the Financial Services Ombudsman to date has been that around 10% of the initial contacts become cases.

6.7 When deciding on the most suitable approach to funding, account must be taken of the need to maximise the number of initial enquiries and complaints that either Oftel’s CRS or the Ombudsman are able to resolve at an early stage, ie through informal contacts and mediation rather than having actual cases. It would also seem sensible to implement a funding mechanism, which rewards companies for improving their standards.

6.8 Whichever option is to be chosen, operators and service providers may choose to set up a contingency fund to account for businesses that cease to trade.

6.9 Set out below are three possible options. Views are sought on which approach is considered the most effective.

Option 1:

6.10 All of the costs of the scheme would be financed by a general levy on all members of the scheme.

Option 2:

6.11 All of the costs of the scheme would be financed through case fees.

Option 3:

6.12 The costs of the scheme would be split 50/50 between a general levy on all members and case fees, (or by any other split considered appropriate by members, spread over all members of the scheme).

6.13 All options would be subject to review once the scheme had been fully operational for one year. The Financial Services Ombudsman Scheme (FSOS), for example, proposes to adopt a 50/50 split for the first year only and to increase the proportion of the scheme funded by case fees as soon as possible in the light of experience of operating the scheme.

6.14 Whichever option is chosen, it is proposed that the general levy for years one to three would include the start-up costs of the scheme.

Apportionment of costs

6.15 There are many ways in which costs could be apportioned between members. Two examples are:

• According to market share.

• In accordance with the ‘member pays’ principle – members who have generated the most complaints would pay a greater proportion of the costs.

6.16 The market share approach may be considered the least fair, with operators, in general, preferring the ‘member pays’ approach. In this case, it should be borne in mind that a higher case fee would be necessary.

Differential charging

6.17 The issue of differential charging also needs to be considered ie how to determine when various charges should be levied. For example, would the company be charged for the initial enquiry to the Ombudsman? It may be helpful to have a significant step change between the mediation stage and a formal investigation to encourage companies to resolve disputes at the earliest opportunity. There might also be a case for differentiating at the formal investigation stage; say, between cases where the complaint had been investigated and the Ombudsman found in favour of the operator and where the Ombudsman found in favour of the complainant.

6.18 If costs were to be allocated on a ‘member pays’ basis, there are various possibilities of how costs might be allocated across members. For example:

• according to the number of upheld complaints;
• according to the total number of all complaints made; and,
• according to the total number of complaints, weighted to reflect the time and cost of resolution to the Ombudsman.

6.19 Whichever approach is decided upon, the challenge is to ensure that costs are allocated as equitably as is feasible. It is important that companies who are members, and potential members of the Scheme, are not exposed to uncertain funding requirements.

6.20 Further consideration will need to be given on how best to apportion the levy between start-up costs and ongoing costs. The approach that is adopted must ensure that there are clear incentives for operators to join the scheme on a voluntary basis. As proposed in para 8.8, there will be benefits in membership of a scheme, which is clearly recognised as a ‘hallmark’ for good customer service. Such benefits should outweigh the costs of participation in the initial phase.

6.21 The start-up costs will include, amongst other costs, the search costs associated with finding suitable premises, staff and board members, the fitting out of premises, staff training costs and the initial running costs.

6.22 Oftel will work further on the possible costs and volume of the Ombudsman’s workload and the level of start-up costs during the consultation period and welcomes relevant evidence on this subject.

7.1 The objective for the Ombudsman is to ensure equality of access to the Ombudsman scheme for all, based upon the treatment of consumers as individuals. This will involve removing barriers that could adversely affect consumers’ ability to use the scheme. All consumers, (including elderly and disabled people, users of other languages and members of different communities, ethnic or otherwise), should, as far as possible, have equal access to the scheme.

7.2 More than 14% of adults in the UK have some form of disability arising from sensory, physical or intellectual impairments. The number of people with severe impairments is, however, relatively small eg around 27,000 deafblind people. The demographic composition of the UK is changing and the numbers of elderly impaired people will continue to increase. Since October 1999, when Part III of the Disability Discrimination Act 1995 (DDA) came into effect, all service providers have been required to consider making reasonable adjustments to their services, so that they are accessible to disabled people. This might include, where reasonable, changing policies, procedures or practices that exclude disabled people, the provision of auxiliary aids and services or, where a physical feature is a barrier to a service, finding an alternative way of delivering the service.

7.3 In relation to telecommunications, and in addition to the DDA, there are conditions in the licenses of fixed line operators that place certain obligations upon them in relation to disabled customers. Some fixed operators already provide a range of services for disabled people and some will be implementing changes that include provision of bills and other information in different formats. The Ombudsman should aim to reflect best practice of the kind set out in a ‘Best Practice Manual’ currently being produced by the Advisory Committee on Telecommunications for Disabled and Elderly People (DIEL).

7.4 The Ombudsman will need to ensure that all staff receive appropriate training in disability awareness and disability etiquette to ensure they are sensitive to the needs of complainants with disabilities and can identify complaints that are disability specific at an early stage. For example, in some circumstances, someone with speech impairment could be mistaken for someone who is intoxicated; calls via textphone take longer than normal calls and require patience on the part of staff. In contrast, for people with arthritis and Multiple Sclerosis, holding a telephone can be both painful and difficult. Lengthy calls to discuss complaints can, therefore, be a problem. In many cases, only simple and cost-effective solutions will be needed to enable someone with a disability to have full and equal access to the service.

7.5 The Ombudsman scheme will need to ensure that there is access to Braille and audiotape transcription services on demand, and there are suitable arrangements for producing publications and written communications (correspondence etc) in Braille, large print, audio format, etc on request. Leaflets setting out the role of the Ombudsman should be made widely available in alternative formats. These should include a location map and travel information as well as a section on facilities for visitors with disabilities. It is essential that all information be written in clear and concise English. It is proposed that the Ombudsman would consult language specialists such as the Plain English Campaign and the Plain Language Commission and groups such as Mencap and People First (which represents people with learning disabilities) when devising the leaflets. A signed video presentation of this information for users of British Sign Language should be produced.

7.6 Account should be taken of the needs of people with partial sight and colour blindness in relation to standard print publications, eg colours and colour contrast. The Ombudsman’s website would need to ensure that its design features met these needs, together with those of blind and other disabled people. To make sure of this, the website should meet the standards of the W3 Consortium (www.w3.org/WAI). This is the body responsible for, amongst other things, setting accessibility standards for websites, known as the Web Accessibility Initiative (WAI).

7.7 Although the intention is that the Ombudsman service will rely predominantly on written correspondence, provision will be made for oral hearings and personal visits in exceptional circumstances. This will be especially important for those complainants with a speech or hearing impairment, and the Ombudsman’s service will need to ensure that staff are sensitive to an individual’s fluency in English, eg speakers of minority ethnic languages and those whose first language is British Sign Language (BSL), or literacy level eg with learning disabilities.

7.8 Consideration will have to be given to consumers with differing levels of hearing loss, eg contact by telephone will require textphone arrangements for people with a profound hearing loss and/or speech impairment. Staff dealing with calls will need to be trained to use a textphone, with the telephone number included in publicity and information material. There may be calls via Typetalk from hearing impaired people who wish to receive text but speak their side of a conversation. Consideration should be given to the use of videophone facilities, particularly for users of BSL.

7.9 It is likely that the Ombudsman’s office will need to use a call queuing system, in which case best practice will be followed in terms of the speed of announcements and volume. Provision will have to be made for people with hearing impairments.

7.10 Roughly 20% of adults – as many as seven million people – have more or less severe problems with basic skills; in particular with what is generally called ‘functional literacy’ and ‘functional numeracy’. The Ombudsman would need to take this into account when producing documents and writing letters dealing with complex and sometimes technical telecoms complaints. ADR staff could also take part in writing-skills courses.

7.11 The Ombudsman would need to ensure that access was provided to those people for whom English was not the first language (including Welsh language users and people from ethnic communities). The Ombudsman would consider requests to provide translations of publications and written communications, preferably arranging to outsource where appropriate, taking into account specific individual needs. Guidelines for best practice should be developed eg a time frame for providing translations.

7.12 When dealing with written requests from consumers, there will need to be some sensitivity to the individual’s use of language. For example, BSL has a different grammar and word order from Standard English, and letters from customers whose first language is BSL may not follow Standard English practice as a result. This should not be taken to reflect on the writer’s intelligence in any way.

7.13 Given that the demands of providing multi access approaches are unlikely to be excessive, it is proposed that the most practicable approach to customers with individual needs would be to outsource the service. Similarly, if interpreters, sign language specialists, translations into foreign languages, etc. were required, these services could be purchased as the need arose.

7.14 Based on the experience of other Ombudsman schemes, complaints involving disabled people are likely to be proportionate to their presence in the general population. It is unlikely, therefore, that the costs of accessibility would be prohibitive. Based on the experience of other Ombudsman schemes, it is not envisaged that the Telecommunications Ombudsman will need to have an ‘accessibility budget line.’ It would be more practicable to allocate costs as appropriate eg to items such as publicity, telephone charges etc.

8.1 This chapter highlights some of the issues concerning information requirements appropriate for an UK wide telecommunications Ombudsman in order to:

• inform users how the Ombudsman works;

• create appropriate consumer and industry awareness;

• generate the necessary industry participation;

• interface with the regulatory authorities; and,

• interface with other consumer organisations and third parties.

This is based on the working group having taken account of examples of other schemes, including the Office of the Ombudsman of Estate Agents, the Banking Ombudsman Scheme, the Australian Telecommunications Industry Ombudsman (TIO) and the Gas Consumer Council (former consumer representation for the gas industry).

8.2 The objective for this consultation is to identify a minimum set of requirements that an Ombudsman would need to put in place to ensure a service level to consumers for resolving disputes that is quick, efficient, accurate and reliable.

8.3 More specifically, it is proposed that the Scheme would ensure that:

• the roles, responsibilities and the interplay between Oftel and the Ombudsman are clearly and transparently defined; and,

• both consumers and industry are clear about the respective roles to be played by Oftel and the Ombudsman in the handling of complaints.

8.4 Information dissemination plays a fundamental role and the Ombudsman will, therefore, need to consider a wide range of methods and approaches. It is crucial that the approach adopted avoids misuse or inefficiencies as this might discredit the scheme. The Ombudsman will need to have adequate funding and resources included within the budget to support informational needs.

Public and industry awareness

8.5 If consumers are to benefit fully from the Ombudsman service, they must be fully aware of its existence. It is suggested that all operators and service providers in the Scheme would be required to ensure that the telephone number of the Ombudsman was listed, having proper prominence on their bills. More importantly, consumers must understand the procedures to be followed before approaching the Ombudsman, and both industry and Oftel will have an important role in this educational process. The objective should be to promote the Ombudsman scheme in a way that minimises the number of inappropriate requests made for intervention. This will be particularly relevant at launch, and during the first six months to one year of operation, and may include some form of PR launch or media advertising approach in conjunction with, or separately from, Oftel.

8.6 Achieving the right level of ongoing public awareness will ultimately benefit all members, whatever Ombudsman scheme is chosen. The intention is that the establishment of the Ombudsman should give industry a strong incentive to limit the number of cases handled by the Scheme by improving customer service and complaint handling techniques. This could be encouraged by the Ombudsman producing consumer guides, publishing dispute statistics, providing information to the media either proactively or when prompted to do so on specific issues, etc. This would also help to raise the profile of the Ombudsman as an independent body. It could also be encouraged by an appropriate funding mechanism, and it is for industry to decide, within the context of this consultation, how this might best be achieved.

8.7 Possible ways of promoting industry support for the Ombudsman might include a Member’s Communication Plan, members’ information guides and the hosting of regular workshops to discuss common disputes. The Communication Plan (which it is proposed be based on similar lines to that being implemented by the Australian Telecommunications Ombudsman) would aim to keep members regularly informed about the Ombudsman’s complaints procedures, ideally through a dedicated link to the Website, encouraging a two way dialogue and, thereby, helping to reduce the number of complaints.

8.8 The development of a logo/registered trademark of some kind would indicate to consumers that their operator/provider was a reputable organisation, and could help to promote voluntary membership of the scheme.

9.1 Whilst it will be for the Ombudsman to decide how he or she will interact with other organisations, this chapter makes some proposals for discussion and comment.

9.2 It is proposed that the process of interaction could be set out in a Memorandum of Understanding (MOU) setting out the arrangements, having due regard to the Data Protection Act 1998 and other relevant legislation, to be agreed between the Ombudsman and the organisation concerned.

9.3 Oftel suggests that the procedure for a dispute to reach the Ombudsman may be as follows:

• A consumer complains to company.
• The unresolved complaint is escalated through the company’s complaint procedures.
• When no resolution is possible, the company provides the consumer with a ‘deadlock’ letter.
• The consumer is then free to approach the Ombudsman.

9.4 There will inevitably be other organisations that may be involved in the course of the complaint. These include:

• Oftel’s CRS ( including the regional Advisory Committees for Scotland, Northern Ireland and Wales).
• Oftel’s Compliance Directorate.
• Advice providers, such as Citizen Advice Bureaux (CAB) and Trading Standards Offices (TSO).
• Independent Committee for the Supervision of Standards of Telephone Information
• Services (ICSTIS).

Oftel’s Compliance/Regulatory Policy Directorates

9.5 Procedures will need to be in place for instances where, for example, the Ombudsman identifies a potential licence breach/competition/unfair contract term issue. In such events, the Ombudsman would need to have regard to the Data Protection Act 1998 confidentiality issues and other relevant legislation. The Ombudsman would consider each case on its own specific merits and decide whether there was a case to be investigated on behalf of the individual.

9.6 The Ombudsman may need specific technical or regulatory advice, as it is unlikely that staff will have the necessary breadth of knowledge on these issues, especially in the early days. Therefore, in such circumstances it may be necessary for the Ombudsman to contact Oftel in order to utilise its expertise. This would be on a general basis and not dealing with individual’s information.

Advice providers

9.7 When seeking advice regarding a complaint, many consumers will approach advice providers such as CABs or TSOs as the first point of call. When setting up the Ombudsman, it will be essential to liase with advice providers to ensure they are fully aware both of the existence of the Ombudsman and the procedures involved. The advice worker’s role as facilitator will remain important.

Oftel’s Consumer Representation Service (CRS)

9.8 Oftel’s CRS (see para. 9.4) was formed to meet the Director General’s obligation under the Telecommunications Act 1984 "to consider any representation relating to telecommunications services provided they are not frivolous". CRS does not have any powers to resolve disputes.

9.9 Much of CRS’s work is on a ‘good offices’ basis. In this role, amongst other things, CRS facilitates consumers’ complaints by providing information eg about complaint handling services; and/or feeding the complaint into the company at a higher level.

9.10 Once the Ombudsman is established, CRS will have a vital role to play in avoiding duplication and consumer confusion, thereby helping to ensure that the Ombudsman service functions efficiently. For example, consumers often ring CRS when they are unable to contact a company, at which point they are not in dispute as such and there would be no need for the Ombudsman to be involved. A way in which the procedure might work is:

• Consumer attempts to complain to their telco and – for whatever reason – is unable to proceed through the usual procedures.
• Consumer contacts Oftel’s CRS. Information is provided and/or the complaint is forwarded to the appropriate stage of the operator’s/service provider’s complaints handling process.
• If the consumer returns to CRS because the dispute cannot be resolved, CRS will inform the consumer of the existence and role of the Ombudsman.
• If necessary, CRS will contact the operator/service provider, inform them of the obligation to provide a deadlock letter and advise the consumer of their right to contact the Ombudsman.

9.11 This type of procedure would benefit consumers and avoid duplication. The more efficiently the enquiry is handled in the first instance, the less need there will be for complaints to be referred to the Ombudsman. Moreover the procedure will ensure that consumers are made aware of the Ombudsman.

Interaction of ICSTIS with the Ombudsman

9.12 ICSTIS, the Independent Committee for the Supervision of Standards of Telephone Information Services, was established in 1986 as an independent, non-statutory, body, funded by telephone companies. ICSTIS is responsible for regulating the content and promotion of services charged at a premium rate. At present, network operators recognition of ICSTIS is voluntary for most premium rate services (PRS).

9.13 Currently, only a small group of services – those which involve certain elements of live conversations – are subject to regulation by Oftel and are defined in Telecommunications Act licences as ‘Controlled Services’. If the telephone company, or the provider of the live PRS, refuses to participate in the supervisory process run by ICSTIS, Oftel has the power to take enforcement action requiring the telephone companies to cease the service on which the live PRS is run.

9.14 In August 1999, Oftel (in a joint consultation with ICSTIS) proposed, amongst other things, that the definition of ‘Controlled Services’ in the Telecommunications Act licences be extended, so that most PRS (to be known as ‘Controlled Premium Rate Services’) would be subject to the same regulatory arrangements that apply to live PRS. In this context, it has therefore been proposed that the ICSTIS code of practice (known as the ‘Live Code’) currently recognised by Oftel for the purposes of the live PRS Telecommunications Act licence condition should be revised to take into account this wider definition. The Live Code, which governs the standards for those providing and promoting PRS services, will, in its revised form, then have to be recognised by the Director General.

9.15 In September 2000, Oftel issued a Statement that control by ICSTIS would be extended to cover all PRS at or above the lowest tariff for a current premium rate call and for all sex content and chatline services, regardless of price. Under this arrangement, Oftel will be able to intervene, if requested to do so by ICSTIS. Oftel is currently reviewing the draft proposed modification of the licence condition in the light of comments received and plans to progress toward statutory consultation in the coming months.

9.16 Generally speaking, ICSTIS’s role is not about resolving consumer disputes although, in certain situations, it may award compensation or forward requests for redress to PRS providers. The form that this can take depends on the type of service and whether it is a Controlled Service.

9.17 It is possible that ICSTIS may wish to develop its own Memorandum of Understanding with the Ombudsman. A typical path for a dispute might be whereby a dispute referred to the Ombudsman may draw to light activities contravening the ICSTIS Codes of Practice, which might then be referred to ICSTIS to address the activities of the provider.

9.18 Oftel will discuss the relationship between the Ombudsman and ICSTIS further in the course of the consultation. Although there are some differences between ICSTIS’ current role and that envisaged for the Ombudsman, and related differences in governance, ICSTIS may provide a useful model against which detailed operational procedures for the Ombudsman can be considered.

Partnership understandings

9.19 One possible way to ensure that there is a clear and unequivocal understanding of the responsibilities of the interfacing bodies may be to draw up a Partnership Understanding for other bodies where there are already complaint resolution functions in place. This would help make clear where the boundaries between respo