Final guidelines issued by the Director General of Telecommunications

Contents

Summary

Chapter 1 Background and Introduction

Chapter 2 Legal framework

Chapter 3 Issues raised by consultation

Chapter 4 The criteria for approval

Chapter 5 Approval procedure

Annex A Respondents to the Draft Guidelines

 Summary

S.1 These guidelines follow Oftel’s draft guidelines on dispute procedure schemes published on 4 April 2003 (the ‘Draft Guidelines’). The purpose of these final guidelines is to provide guidance to the industry about the way Oftel intends to assess dispute procedure schemes for the purposes of Sections 52, 54 and 55 of the Communications Act 2003 (the ‘Act’).

S.2 Section 52 of the Act requires Ofcom to ensure that public communications providers provide access to dispute procedure schemes to their domestic and small business customers (where a small business is one with 10 or less employees/volunteers). Additionally, Section 52 and Section 54 of the Act require Ofcom to approve these dispute procedure schemes. These guidelines set out what Oftel intends to consider when approving such procedures. The industry should take this into consideration when establishing new or joining existing dispute procedure schemes.

S.3 Chapter One provides the background to Oftel’s work on dispute procedure schemes and to the guidelines.

S.4 Chapter Two considers the legal framework under which dispute procedure schemes are required to be approved. That is, it considers the Universal Service and Users’ Rights Directive (USD) and the European Commission recommendations on alternative dispute resolution and the provision of the Act.

S.5 Chapter Three summarises the responses to the consultation. It also discusses differing views where appropriate and gives the Director’s view on each such issue.

S.6 Chapter Four sets out in more detail the criteria that will be used to review and approve dispute procedure schemes.

S.7 Chapter Five provides details of the approval processes. This includes the timescales for submission, the initial approval process itself and the proposed reviews of approved dispute procedure schemes in the future.

Chapter 1

Introduction

Purpose

1.1 These guidelines follow Oftel’s draft guidelines on dispute procedure schemes published on 4 April 2003 (the ‘Draft Guidelines’). The purpose of these final guidelines is to provide guidance to the industry about the way Oftel intends to assess dispute procedure schemes for the purposes of Sections 52, 54 and 55 of the Communications Act 2003 (the ‘Act’).

1.2 Section 52 of the Act requires Ofcom to approve dispute procedure schemes. These guidelines set out what Oftel intends to consider when approving such procedures. The industry should take this into consideration when establishing new or joining existing dispute procedure schemes.

1.3 These guidelines also provide Oftel’s response to points raised during consultation on the provisions set out in the Draft Guidelines.

Background

1.4 In September 1999 the Director General of Telecommunications (the ‘Director’) published a consultation document Proposed New Dispute Resolution Procedures for Fixed Telecommunications, available at: http://www.oftel.gov.uk/publications/1999/consumer/drp0999. In this document, he set out proposals to meet the requirements under the Regulations implementing the Revised Voice Telephony Directive (RVTD) (Directive 98/10/EC, implemented by the Telecommunications (Open Network Provision) Regulations 1998 (SI 1998 No. 1580)). The document covered disputes between operators and/or service providers on the one hand, and between consumers and their operator/service provider, on the other.

1.5 Following the consultation, the Director made a clear distinction between these types of disputes, ie, disputes between operators and/or service providers and those between consumers and their operator or service provider. In respect of the former, the Director issued a Statement, entitled Resolving Disputes between Fixed Telecommunications Service Operators (http://oftel.gov.uk/publications/consumer/disp0900.htm).

1.6 Regarding disputes between consumers and their operator and/or service provider, the Director decided to explore the feasibility of a Telecommunications Ombudsman scheme. As a result, a further consultation, on alternative proposals for resolving disputes between consumers and their operators/service providers was published in March 2001 entitled "Developing a Telecommunications Ombudsman", available at: http://www.oftel.gov.uk/publications/consumer/ombu0301

1.7 Following the consultation, a statement setting out the framework for the Ombudsman Scheme was published in July 2001 entitled "Implementation of a Telecommunications Ombudsman Scheme", available at: http://www.oftel.gov.uk/publications/consumer/ombu0701. The statement set out the timetable for the introduction and the operational launch of the Ombudsman scheme. The Director decided to make membership of the Ombudsman scheme a voluntary matter for industry and not to exercise his powers under the RVTD. By making membership voluntary, the Ombudsman scheme could extend beyond the core requirements of the RVTD and consequently meet the wider principles of the Universal Services Directive (Directive 2002/22/EC) (USD) and the implementing provisions of the Act.

1.8 The Office of the Telecommunications Ombudsman (otelo) was established in response to the statement above. Otelo opened for business on 1 January 2003. At the time of publication, otelo had 15 members. These are: Broadsystems Ventures, BT, Centrica, IDT Communications, npower, NTL, Powergen, Saga, Tesco, 3, Thus, United Utilities, Virgin Mobile, Vodafone and Your Communications.

1.9 Under the USD at Article 34(1) there is a regulatory duty upon all Member States to ensure that effective dispute procedures are in place within the new regulatory framework which came into effect on 25 July 2003. This requirement is reflected in Sections 52, 54 and 55 of the Act. Oftel published Draft Guidelines on dispute procedure schemes on 4 April 2003, available at: http://www.oftel.gov.uk/publications/ind_guidelines/2003/disp0403.htm.

Scope and status of the guidelines

1.10 These guidelines apply only to the assessment and approval of dispute procedure schemes set up to meet the requirements of Condition 14(3) of the General Conditions of Entitlement, in accordance with the duties and responsibilities set out in Sections 52, 54 and 55 of the Act. As such they are only concerned with disputes between consumers and small businesses (as defined by Section 52(6) of the Act) and their operator or service provider.

1.11 The Director and later Ofcom will take the guidelines into account in assessing and approving any dispute procedure schemes. However, the matters set out in these guidelines cannot fetter the Director’s or Ofcom’s discretion and the ability to depart from the guidelines where warranted is maintained. (The Director is able to exercise powers under the Act and Article 3(1) of the Communications Act 2003 (Commencement No. 1) Order 2003.)

1.12 It can be anticipated that Ofcom will develop and update these Guidelines in the light of experience of the operation of dispute procedure schemes, lessons from other parts of the communications sector and other industries and in the event of any changes to UK or European Community law.

1.13 Chapter Two considers the legal framework under which dispute procedure schemes are required to be approved, and in particular considers the provisions of the Act. Chapter Three discusses the responses to the consultation. Chapter Four sets out in more detail the criteria that will be used to review and approve dispute procedure schemes. And Chapter Five provides details of the approval processes.

Chapter 2

Legal framework

Universal Service Directive

2.1 Article 34(1) of the USD obliges Member States to ensure that:

• transparent, simple and inexpensive out-of-court procedures are available for dealing with unresolved disputes, involving consumers, relating to issues covered by [the Universal Service] Directive; and,
• such procedures enable disputes to be settled fairly and promptly and may, where warranted, adopt a system of reimbursement and/or compensation.

2.2 It also states that:

• Member States may extend these obligations to cover disputes involving other end-users.

2.3 The European Commission has published two main recommendations regarding Alternative Dispute Resolution. All discussion of dispute procedure schemes should be seen in the general framework set by these recommendations.

2.4 Commission Recommendation 98/257/EC sets out the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes. In particular, it sets out the following principles:

• independence, ie to ensure impartiality of the decision-making body;
• transparency, ie the rules and the results (although not necessarily on a case by case basis) of procedures are clear and publicly available;
• adversarial, ie all parties are allowed to present their viewpoint;
• effectiveness, ie easily accessible to the consumer, free of charge or of moderate cost, short period of decision making and investigative powers of the decision making body;
• legality, ie decisions cannot result in the consumer being deprived of the protection afforded by the mandatory provisions of the law of the State where the decision making body is established;
• liberty, ie decisions can only be binding if consumers are previously informed of this and they accepted, and that this cannot be a result of a commitment given before the materialisation of the dispute; and
• representation, ie does not deprive parties of being represented or assisted by a third party at all stages of the procedure.

2.5 In 2001, the EC published a further recommendation supplementing but not replacing Recommendation 98/257/EC. Commission Recommendation 2001/310/EC sets out the principle for out-of-court bodies involved in the consensual resolution of consumer disputes. In particular it sets out the following principles:

• impartiality;
• transparency;
• effectiveness; and
• fairness.

2.6 In effect, these principles cover the same issues as the principles set out in Commission Recommendation 98/257/EC.

2.7 In interpreting the requirements of the UK legislation implementing the Article 34 of the USD, Oftel considers that these principles and their explications will provide the foundation for its thinking.

Communications Act 2003

2.8 The provisions of the USD have been implemented by the Act (Sections 52, 54 and 55). Section 52 places a duty on Ofcom to set general conditions to ensure that a public communications provider establishes and maintains procedures to, amongst other things, handle and resolve disputes between them and their domestic and small business customers.

2.9 Furthermore, in carrying out this duty, under Section 52(3) of the Act, Ofcom must secure, so far as it considers it appropriate, that the procedures established for handling and resolving complaints are:

• easy to use;
• transparent and effective; and
• free of charge to domestic and small business customers.

2.10 Section 54 of the Act requires Ofcom to approve and keep under review the approval of dispute procedure schemes approved by them. Section 54(2) specifically prevents Ofcom from approving dispute procedure schemes unless they are satisfied that the arrangements under which the procedures have effect:

• are administered by a person who is for practical purposes independent (so far as decisions in relation to disputes are concerned) of Oftel or Ofcom and the communications providers to whom the arrangements apply;
• give effect to procedures that are easy to use, transparent and effective;
• ensure that domestic and small business customers of the communications provider can use the procedures free of charge;
• ensure that all information necessary for giving effect to the procedures is obtained;
• ensure that disputes are effectively investigated;
• include provisions conferring power to make awards of appropriate compensation; and
• are such as to enable such awards of compensation to be properly enforced.

2.11 When considering whether to approve dispute procedure schemes, Section 54(6) of the Act requires that Ofcom have due regard for the matters set out in Section 54(7) of the Act. Those matters include the need to secure that the number of different sets of procedures approved is kept to a minimum.

2.12 Section 52(6) defines domestic and small business customer as customers of communications providers who (a) are not themselves communications providers nor, (b) undertakings for which more than 10 people work (whether as employees, volunteers or otherwise).

2.13 The Explanatory Notes to the Act (available at: http://www.parliament.the-stationery-office.co.uk/pa/ld200203/ldbills/041/en/03041x--.htm) note that appropriate measures by Ofcom – when approving dispute procedure schemes – may include establishing an independent body corporate to administer and enforce the necessary arrangements. The notes also refer to Ofcom being able to oblige public communications providers to pay for the establishment and maintenance of such a body (see paragraph 141 of the Explanatory Notes).

General Conditions of Entitlement

2.14 The requirement to have approved dispute procedures is being implemented in the General Conditions of Entitlement. The Director and the Department of Trade and Industry have both consulted on the General Conditions to be applied under Section 45 of the Act. The final version of these General Conditions can be found at http://www.oftel.gov.uk/publications/licensing/2003/cond0703_annexb.pdf.

2.15 General Condition 14.3 states:

Issues raised by consultation

3.1 The responses to the Draft Guidelines fell primarily in two camps. One group of respondents – comprising largely of consumer groups and communications providers belonging to Otelo – was in favour of Oftel’s proposals and preference for Ombudsman-type schemes over arbitration- or mediation-based schemes. The other group of respondents – comprising largely of communications providers that have not joined Otelo – disagreed with Oftel’s preference for Ombudsman-type schemes and argued in favour of arbitration- and mediation-based schemes. Respondents raised other issues such as the requirement to have a dispute procedure scheme, the costs of procedures and whether decisions can be binding. These are also dealt with below.

Requirement for dispute procedure schemes

Freeserve’s response

3.2 Freeserve stated in its response that it does not believe that the requirement to provide free complaint handling and dispute resolution set by the Act is absolute. That is, the Act states, at section 52(3), that "it shall be the duty of OFCOM to set such general conditions (if any) as they consider appropriate".

Director’s view

3.3 These Guidelines are designed to provide guidance on how the Director will assess and approve the dispute procedure schemes required by the Act and the related General Condition 14. The issues of whether the dispute procedure scheme should be free of charge to the consumer and whether all communications providers with consumers or small businesses as customers come directly from the Act and the General Conditions. These provisions were consulted upon extensively and therefore the Director considers these matters closed. That is, as set out at section 52(3)(b) of the Act, domestic and small business customers have the right to use the dispute procedure schemes free of charge. Also, under General Condition 14.3, all relevant communications providers must be compliant with the obligation to offer dispute procedure schemes to its relevant customers.

Ombudsman-type schemes v. arbitration/mediation-based schemes

Summary of responses in favour of Ombudsman-type schemes

3.4 The British and Irish Ombudsman Association (BIOA) stated that Otelo is a full member of the BIOA and that they welcomed "the emphasis given in the Director General’s document to the advantages of an ombudsman scheme for resolving disputes".

3.5 BT stated in their response that it "fully supports an Ombudsman service as this will benefit not only the industry but the consumer." BT goes on to state:

3.6 BT also stated that in the long term, consideration should be given to making it a requirement for a dispute procedure scheme to be approved that it had ISO 9000 or equivalent.

3.7 Consumers’ Association (CA) was strongly in favour of the Telecommunications Ombudsman scheme being approved and against any approval of arbitration and/or mediation-based dispute procedure schemes. CA stated: "We do not believe that alternatives [to the Telecommunications Ombudsman Scheme], such as arbitration, are fit for purpose in this market." CA stated that it believed that "the purpose of the guidelines should be to ensure that the Ombudsman scheme sets the minimum standard for redress in the sector." CA also stated:

3.8 The National Consumer Council (NCC) stated in their response that:

3.9 The NCC also agreed with the Director’s proposed treatment of ease of use, transparency, effectiveness and cost in assessing and approving dispute procedure schemes. In particular the NCC stated that an Ombudsman scheme would be better than arbitration or mediation-based schemes for ease of use and transparency.

3.10 The NCC also stated:

3.11 The Scottish Advisory Committee on Telecommunications (SACOT) was in favour of the Draft Guidelines and supported the conclusion that there are advantages if communications providers join an ombudsman scheme. SACOT also agreed that both arbitration and mediation are inappropriate for such disputes.

3.12 The Welsh Advisory Committee on Telecommunications (WACT) supported SACOT’s submission. In particular, WACT highlighted that they regarded "formal arbitration is unacceptable for disputes involving ordinary consumers. Such documents based procedures severely disadvantage consumers with low literacy skills". The Northern Ireland Advisory Committee on Telecommunications (NIACT) agreed with SACOT and WACT.

Summary of responses in favour of arbitration/mediation-based schemes

3.13 Kingston Communications state that while they agree that "Oftel’s interpretation of clause 50 [now section 52] as stated in the consultation is in Kingston’s opinion fair and reasonable", they do "question whether the advantages that Oftel mention in joining an Ombudsman Scheme would be applicable in our case." Kingston believes that its current dispute procedure scheme – based on arbitration – would fulfil the requirements.

3.14 Orange, O2 and T-Mobile submitted a joint response to the Draft Guidelines. Their main concern regarded the issue of arbitration/mediation v. Ombudsman schemes. They stated:

3.15 In particular, these companies state that "Arbitration schemes provide an ideal opportunity for a consumer (and a Communications Provider) to express their views in a balanced manner. Having considered the submission of each party an independent expert assesses the evidence put before him and makes a decision based not only on the law but also on what is reasonable taking into account any applicable codes of practice." On this basis, these companies state that arbitration is not necessarily overly legalistic and state that it is not the case that arbitration schemes have to be solely document-based.

3.16 Orange, O2 and T-Mobile set out a number of options for ensuring that any dispute procedure scheme created a level playing field. These were:

• providing the facility for a complainant to speak directly to an independent advisor in order to provide assistance in completing any complaint registration forms
• any online application process should be configured in such a way that it is accessible to disabled customers, ie screen reader compatible
• all information regarding the dispute resolution process should be easily understandable throughout the process, This may be facilitated by ensuring that all relevant literature is reviewed by a body such as the Campaign for Clear English before publication;
• All relevant literature should be available on request in a variety of formats free of charge;
• Providing a facility for oral evidence to be given remotely or in person
• Any agreed scheme will allow complainants to request additional third party support if required

3.17 Telewest Broadband (TWB) state in their response:

Director’s view

3.18 The Director considers that neither the UK nor European legislation specifies the type of dispute procedure scheme that should be used for consumers. However, as has been made clear, the Director’s preferred option is the Telecommunications Ombudsman Service. The Director believes that an Ombudsman-based scheme offers considerable benefits and, subject to the formal review described in Chapter 5, anticipates that such a scheme is likely to meet the criteria for approval. On the basis of the current and proposed membership the Director considers that the Ombudsman appears to be the preferred option of companies in the fixed and mobile telecoms industry with the majority of end-users.

3.19 Having assessed the submissions by all the respondents, the Director considers that the essential point is the experience of the consumers using or attempting to use such dispute procedure schemes. The Director considers that it is possible to set criteria that ensure the needs of consumers are met, without necessarily defining whether it should be provided by an Ombudsman-type service or arbitration/mediation.

3.20 Therefore, the criteria for approval have been restated with this aim in mind. In certain areas, this has required making the criteria more specific. For example, the ways in which communications providers must make customers aware of their dispute procedure scheme.

Cost of dispute procedure schemes

Industry responses

3.21 TWB also raised concerns over the potential cost of Otelo in particular and independent ADR in general. TWB also stated that "the rights of the operator/SP are also valid and should be protected. Any scheme therefore, should not be so artificially tilted in favour of the customer, as to be to the detriment of fair play for all.

3.22 Freeserve expressed concerns that consumers would be able to hold companies to ransom due to the costs to the communications provider involved in a case going to the dispute procedure scheme. Freeserve also expressed concern regarding vexatious complainants.

Director’s view

3.23 The Director considers that the argument that separates the costs of the dispute procedure scheme from what a company would have done in the event of no such procedure existing is fundamentally flawed. Consumers are already entitled to take companies to the small claims court or to continue with their complaint with the company, potentially leading to legal action by the company. Any of these options could easily cost the same or more than the dispute procedure scheme. To imply that there would be no cost to the company in the absence of a dispute procedure scheme is wrong.

3.24 On the issue of vexatious or frivolous complaints, the Director considers that dispute procedure schemes should be capable of disregarding such complaints at the earliest opportunity. The purpose of approved dispute procedure schemes is to ensure that consumers with a genuine dispute can receive fair, effective and free dispute resolution.

Binding nature of decisions

Industry responses

3.25 Freeserve stated that the Draft Guidelines would create a significant imbalance in the bargaining positions of the parties as the decision of any independent body will only be binding for the communications service provider and not for the complainant.

Director’s view

3.26 The Director considers that the decisions of dispute procedure schemes should be binding on the communications provider, but not binding on the consumer. This is because Commission Recommendation 98/257/EC states that:

3.27 Within this context, it is clear that a dispute procedure scheme that attempted to bind consumers to its decisions could not be approved, because it would be attempting to remove consumers’ right to bring the matter before the court without their agreement and prior to a dispute arising.

3.28 Additionally, the Director notes that dispute procedure schemes are intended to change the balance of power from the company in favour of the consumer. One of the fundamental tenets of EC policy on alternative dispute resolution is that it is intended to rectify the balance of power between individual consumers and companies, both in terms of money and access to legal expertise.

Other issues raised in the consultation

3.29 There were other areas where respondents requested clarification of Oftel’s meaning or intention. The Director considers that these issues have been addressed in the following chapters.

Chapter 4

The criteria for approval

4.1 Section 54 of the Act clearly sets out a range of criteria that dispute procedure schemes must meet before they can be approved. These can be summarised as:

• independence/impartiality;
• easy to use processes;
• transparent processes;
• effective processes;
• free of charge to domestic and small business customers;
• effective information gathering and investigative powers;
• powers to make and enforce awards;
• consistency between different procedures; and
• keeping the number of approved schemes to a minimum.

4.2 This chapter sets out the Director’s interpretation of these criteria and where appropriate has set targets that will need to be met. In providing guidance on the interpretation of these criteria, the Director has taken into account:

• Commission Recommendations 98/257/EC and 2001/310/EC; and
• common practice of dispute resolution schemes in other sectors.

Operational independence

4.3 Operational independence means that the dispute procedure scheme must be demonstrably independent from those whose disputes it is resolving, in particular the communications providers. This does not mean that the dispute procedure scheme cannot be appointed or chosen by the communications provider or that the communications provider should not pay the dispute procedure scheme. It means that there are sufficient safeguards in place to demonstrate impartiality.

4.4 Impartiality is a necessary prerequisite for a dispute procedure scheme. Prior to granting approval for any dispute procedure scheme Oftel would need to be satisfied that the scheme had safeguards in place to ensure its impartiality in resolving disputes between the parties. To ensure this Oftel would expect those responsible for the scheme to adhere to the following principles:

• appointments should be for a fixed term and appointees shall not be liable to be relieved of their duties without just cause;
• those administering the procedures should not have any perceived or actual conflict of interest with either party in a dispute; and
• those administering the procedures should provide information about their impartiality and competence to both parties upon request.

Ease of use

4.5 Easy and direct access to the scheme should be available to all consumers (including disabled and elderly people). The communications provider must not be able to limit consumers’ access to the dispute procedure scheme. The Director considers that if a consumer has not had their complaint dealt with satisfactorily within three months of initially making their first complaint to the communications provider they should be able to access the dispute procedure scheme directly. The complainant should also be able to access the dispute procedure scheme – within three months of initial complaint – if the communications provider’s complaint processes have been exhausted and a deadlock letter issued, ie a letter confirming that the communications provider agrees that the dispute should be taken to the dispute procedure scheme.

4.6 In order for direct access to be practical, the communications provider must adequately publicise the availability of the dispute procedure scheme. Each communications provider’s code of practice must contain a reference to their dispute procedure scheme and how it works. Communications providers’ call centre staff should be fully briefed on the existence of the appropriate dispute procedure scheme. Communications providers should – if applicable – put the details of the dispute procedure scheme on their bills.

4.7 In addition, consumers should have access to the services without being obliged to use a legal representative. Even though legal representation may not be obligatory when submitting a matter to a dispute procedure scheme, cumbersome and complicated procedures may ultimately lead to this result.

4.8 Therefore, Oftel will need to assess whether:

• the procedures are easily and directly accessible;
• the procedures are user-friendly;
• the procedures take specific measures and offer the right facilities in order to meet the requirements of disabled or elderly people, those with language difficulties or other special needs, and that those people are made aware of the availability of such measures/facilities;
• all necessary information regarding the procedures are easily obtainable and understood throughout the dispute resolution process (ie the parties should be kept informed at stages of the resolution process); and
• all necessary information regarding the procedures can be made available-upon the consumer's request in alternative formats, such as large print, Braille etc, free of charge.

Transparency

4.9 There are two main issues regarding transparency:

• transparency of the process; and
• transparency of decision making.

4.10 On the first issue, consumers should have a clear understanding of how to access and use the scheme. This should be accomplished by adequate and appropriate publicity for the dispute procedure scheme. Additionally, there should be processes for ensuring that consumers receive feedback on the progress of their dispute, key milestones, etc.

4.11 It is also essential that consumers have confidence in the decision-making processes of the dispute procedure scheme. The Director considers that any dispute procedure scheme should publish a report at least once a year. This report should contain – as a minimum – a similar level of detail on performance to that BIOA members provide in their annual reports. The Director considers that this should give dispute procedure schemes sufficient guidance, while allowing for different schemes possibly requiring slightly different performance measures. (The list of BIOA members and links to their websites can be found at http://www.bioa.org.uk.)

Effectiveness

4.12 In order for a dispute procedure scheme to be effective, it has to be fair, prompt, impartial and allow both parties to present their views. All representations, whether general inquiries or cases, should be dealt with on a fair and equitable basis. The dispute procedure scheme’s processes should facilitate the achievement of this objective.

4.13 For dispute procedure schemes to be effective they should have processes that facilitate prompt decision-making processes. The Director considers that six weeks should be the maximum length of time in which a dispute should be resolved, ie six weeks from the complaint being made to the dispute procedure scheme. The Director is aware that certain very complex cases may take longer to resolve, but considers that those should be regarded as the exception.

Cost

4.14 The Act requires that dispute procedure schemes are offered to consumers free of charge. The Director considers that the dispute procedure scheme should not have:

• charges for complainants;
• complaint registration fee (returnable or not) for complainants; and/or
• costs being awarded against the complainants.

4.15 The responsibility for the funding of the dispute procedure scheme is the responsibility of the communications provider/providers funding it. Therefore, the Director does not consider it necessary to give guidance on how schemes should be funded. However, if a dispute procedure scheme was not adequately funded by its members and became insolvent, the Director believes that the provisions of Section 55 of the Act could be used, ie the power for Ofcom to establish a dispute procedure scheme and arrange for its funding by the industry.

Investigations

4.16 The Director considers the ability of the dispute procedure scheme to investigate is essential to ensuring that disputes are adequately dealt with. Therefore, dispute procedure schemes must be able to investigate cases properly, eg have the ability – within data protection and other applicable laws – to require communications providers to provide evidence, documentation, etc to investigate cases.

Compensation Awards

4.17 In addition to the requirements set out above, Section 54(2) of the Act also requires that before approving dispute procedure schemes, Ofcom is satisfied that adequate provisions are in place to confer the power to make awards of appropriate compensation and to enable that such awards of compensation are properly enforced. In assessing any dispute procedure schemes, Oftel will need to be satisfied that this is the case.

Consistency

4.18 The Director considers that the important issue is consistency of the consumer experience. That is, that a customer of one communications provider receives a comparable level of service from a dispute procedure scheme as a customer using another dispute procedure scheme. The Director considers that – until there is further information on the performance of dispute procedure schemes – this would be satisfied by meeting the criteria above.

Minimum number of dispute procedure schemes

4.19 Section 54(7) requires Ofcom to have regard to "the need to secure that the number of different sets of procedures so approved is kept to a minimum". The Director considers that it would therefore not be appropriate for each communications provider to have a separate dispute procedure scheme. However, the Director also considers that Section 54(7) implies that more than one scheme could be approved as long as all schemes met the requirements set out above. The Director also considers that Section 54(7) would allow for only one scheme to be approved, if it were the only scheme to meet the above requirements.

Chapter 5

Approval procedure

5.1 This chapter sets out how the approval process will work in practice, including:

• who will assess and approve the dispute procedure schemes;
• initial assessment and provisional approval;
• subsequent reviews and approvals;
• the deadlines for submission of dispute procedure schemes for approval; and
• process for submitting applications for approval.

Who will assess and approve the dispute procedure schemes

5.2 Section 54(1) of the Act states that "Before giving their approval to any dispute procedures, OFCOM must consult the Secretary of State".

5.3 The Director will establish a Panel that will assess the proposals received from dispute procedure schemes or communications providers. The Director considers that this Panel should comprise:

• himself or a representative;
• Oftel’s Director of Compliance;
• a senior Ofcom representative; and
• a consumer representative, possibly the Chair of the Ofcom Consumer Panel.

5.4 Once the Panel has reached consensus on whether a dispute procedure scheme meets the criteria set out in the previous chapter, they will formally consult the Secretary of State setting out the basis for approving that dispute procedure scheme.

Approval process

5.5 The Director considers that a two-stage approval process is necessary:

• an initial assessment and provisional approval; and
• a full assessment and approval.

Initial assessment and provisional approval

5.6 The first stage will be primarily a paper exercise. As not all communications providers have been required to have dispute procedure schemes and as these guidelines are new, there will not be any statistical information on which to assess the dispute procedure schemes. Therefore, initially it will be necessary to assess the dispute procedure schemes on the basis of what communications providers or dispute schemes plan to set in place.

5.7 The Director considers that it is the responsibility of the relevant communications providers to submit to Oftel an application for approval of a dispute procedure scheme, in line with the timescales set out below. Or to ensure that the dispute procedure scheme that they are a member of submits such an approval.

5.8 The application for approval should address in detail how the dispute procedure scheme will meet the criteria described in Chapter Four. The application should also state the date at which it is proposed that the dispute procedure scheme would become operational. There is no set format for the application.

5.9 There are three possible outcomes of the assessment process:

• approval;
• approval on the basis that certain changes are implemented; and
• rejection.

5.10 In the case of either of the last two outcomes, the Panel will provide detailed feedback as to why full approval was not granted and what changes would need to be implemented in order to gain approval. The feedback will include a deadline for the communications providers to bring themselves into compliance or face possible enforcement action.

5.11 The Panel will attempt to provide a decision within one month of an application being received.

Full assessment and approval

5.12 The Director proposes that the second stage of the approval process takes place approximately 12 months after the approval of a dispute procedure scheme. This will enable statistical information to be used to measure the effectiveness of any approved dispute procedure schemes.

5.13 The Director proposes that there are three main sources of data that would be appropriate for measuring the effectiveness of a dispute procedure scheme:

• appropriate market research;
• data from the dispute procedure scheme; and
• data from the communications providers.

5.14 The Director considers that market research would be the most effective way of assessing whether consumers are satisfied with how their communications provider has handled any complaints and/or disputes they have had. Market research can also measure whether communications providers are adequately publicising their dispute procedure schemes.

5.15 The Director considers that dispute procedure schemes should provide the following information for the purposes of the second-stage assessment:

• the communications providers included in the scheme;
• total number of complaints received;
• total number of cases opened;
• number of cases opened by communications provider;
• average length of case;
• number of complaints by type of complaint; and
• breakdown of outcome of cases (ie method of resolution and whether in favour of the consumer or the communications provider).

5.16 The Director believes that this level of information is consistent with what dispute procedure schemes should publish in their annual reports.

5.17 The Director considers that communications providers should provide – in strict confidence – the following information for the purposes of the second-stage assessment:

• total number of complaints;
• total number reaching deadlock and/or lasting more than three months; and
• total number of court cases related to disputes.

5.18 This information will be used by the Panel (which Ofcom will now appoint) to assess whether the dispute procedure schemes are meeting the commitments given at the first stage of approval have been met by the dispute procedure schemes and also to assess whether the dispute procedure schemes are meeting the needs of consumers.

Ongoing reviews

5.19 Section 54(4) of the Act obliges Ofcom to carry out periodic reviews all approved dispute procedure schemes. The Director proposes that these reviews should be carried out in the same way.

Timing of assessment

5.20 The Director realises that over the past few months there has been uncertainty regarding the timing of the Communications Bill’s passage through Parliament. Additionally, he recognises that these guidelines – which depended on the drafting of the Communications Bill being finalised before they could be published – are only being published in late July 2003. The Director also recognises that dispute procedure schemes cannot be established instantaneously. Therefore, the Director proposes that the deadline for dispute procedure schemes being submitted for approval by him should be 30 September 2003. The Director considers that this is an adequate timeframe for at least proposals for such schemes to be developed and submitted.

Submission of applications

5.21 Where possible, applications for approval should be submitted by e-mail to chandley@oftel.gov.uk. However, copies may also be posted to the address below.

Chris Handley,
Oftel,
50 Ludgate Hill,
London
EC4M 7JJ

Tel: 020 7634 8863
Fax: 020 7634 8847

Annex A

Respondents to the Draft Guidelines

A.1 Oftel received 15 responses to the document Reviews of dispute procedure schemes: Draft Guidelines issued by the Director General of Telecommunications. The respondents were (in alphabetical order):

• British and Irish Ombudsman Association (BIOA)
• BT
• Cable & Wireless, Energis and COLT (joint response)
• Centrica
• Consumers’ Association (CA)
• Freeserve
• Kingston Communications
• National Consumer Council (NCC)
• Northern Ireland Advisory Committee on Telecommunications (NIACT)
• Office of the Telecommunications Ombudsman (Otelo)
• Orange, O2 and T-Mobile (joint response)
• Scottish Advisory Committee on Telecommunications (SACOT)
• Telewest
• Vodafone
• Welsh Advisory Committee on Telecommunications (WACT)