Additional Charges – enforcement and monitoring programme to assess compliance with Ofcom Guidance

30 September 2014

Complainant: Ofcom own-initiative
Investigation against: Communications Providers offering fixed line telephony, mobile, broadband or Pay TV services to consumers
Case opened: 1 April 2009
Case closed: 30 September 2014
Issue: Compliance with the Unfair Terms in Consumer Contracts Regulations 1999 in relation to Additional Charges, following Ofcom’s publication of Guidance on what we consider to be the law in relation to such charges (Guidance) see related item.
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999
On 19 December 2008, after public consultation, Ofcom published its final Statement in its Review of Additional Charges in contracts for communications services (including non direct debit and early termination charges). That Statement includes sector-specific Guidance which is our view of the application of the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) to certain standard terms in contracts for the supply of communications services (the Guidance).

Given the significant reduction in complaints received about ETCs since the programme opened in April 2009, we have decided to close the Additional Charges programme.

Fairness of consumer contract terms is still an important area of Consumer Protection for Ofcom (for example, certain types of additional charges are being considered as part of Ofcom’s work to improve consumers’ experience of switching between communications providers). We will therefore continue to monitor complaints about additional charges, including charges other than ETCs, in all communications sectors. We will also continue to consider unfair contract terms issues under our relevant enforcement powers. Should we see an increase in complaints about additional charges or receive complaints about unfair contract terms, we will consider further action, including enforcement, where necessary. Any such decisions will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).

Update note – 1 April 2014

Over the last twelve months under the Additional Charges Enforcement Programme (the Programme) we have continued our efforts in relation to ensuring consumer contract terms relating to Early Termination Charges (ETCs) in the communications sector are fair. Whilst complaints in the fixed voice and fixed plus broadband sector have fallen significantly since the Programme opened in September 2009, fairness of consumer contract terms in relation to additional charges is still an important area of Consumer Protection for Ofcom. We have therefore decided to extend the Programme for a further six months. In that time, we will be monitoring consumer complaints in relation to additional charges; including charges other than ETCs; in all communications sectors and, this will help us to identify what our priorities should be under the Programme. This may include enforcement action against specific providers, and any such decisions will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).

End of update note

Update note – 28 March 2013

Over the last six months under the Additional Charges Enforcement Programme (the Programme) we have continued our efforts in relation to ensuring consumer contract terms relating to Early Termination Charges (ETCs) in the communications sector are fair. Whilst complaints in the fixed voice and fixed plus broadband sector have fallen significantly since the Programme opened in September 2009, fairness of consumer contract terms in relation to Additional Charges is still an important area of Consumer Protection for Ofcom. We have therefore decided to extend the Programme for a further twelve months. In that time, we will continue to engage with relevant providers in the fixed voice and broadband sector where appropriate. In parallel, we will also be monitoring consumer complaints in relation to ETCs in all communications sectors and, along with consideration of other issues and developments in those sectors, this will help us to identify what our priorities should be under the Programme. This may include enforcement action against specific providers, and any such decisions will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).

End of update note

Update note – 28 September 2012

Over the last six months under the Additional Charges Enforcement Programme (the Programme) we have continued to monitor compliance with the UTCCRs, particularly in respect of terms relating to Early Termination Charges (ETCs) in the communications sector. We announced our GC9 enforcement and monitoring programme on 25 January 2012, and extended this programme for a further six months in July. CPs that appear not to be complying with the provisions contained within GC9.3 in relation to contract termination will be monitored (and where appropriate enforcement action will be taken) under the Additional Charges programme. Any such decisions and updates on this work will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).

We have therefore decided to extend this Programme for a further six months, to continue our work in relation to additional charges in consumer contracts. We will continue to engage with relevant providers in the fixed voice and broadband sector where appropriate. In parallel, we will also be monitoring consumer complaints in relation to ETCs in all communications sectors and considering other issues and developments in those sectors. This will help us to identify what our next priority should be under the Programme. This may include enforcement action against specific providers.

End of update note

Update note - 30 March 2012

Over the last six months under the Additional Charges Enforcement Programme (the Programme) we have continued our efforts in relation to ensuring consumer contract terms relating to Early Termination Charges (ETCs) in the communications sector are fair. We have decided to extend the Programme for a further six months, to continue our work in relation to additional charges in consumer contracts. We will continue to engage with relevant providers in the fixed voice and broadband sector where appropriate. In parallel, we will also be monitoring consumer complaints in relation to ETCs in all communications sectors and considering other issues and developments in those sectors. This will help us to identify what our next priority should be under the Programme. This may include enforcement action against specific providers.

We announced our GC9 enforcement and monitoring programme on 25 January 2012. CPs that appear not to be complying with the provisions contained within GC9.3 in relation to contract termination will be monitored (and where appropriate enforcement action will be taken) under the Additional Charges programme. Any such decisions and updates on this work will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).

End of update note

Update note - 19 October 2011

Over the last six months under the Additional Charges Enforcement Programme (the Programme) we have continued our efforts in relation to ensuring consumer contract terms relating to Early Termination Charges (ETCs) in the communications sector are fair.

Specifically, we have concluded our work in relation to the fixed voice, fixed voice plus broadband and broadband only sectors, having worked with a number of providers in relation to the fairness of their terms relating to ETCs.

We have decided to extend the Programme for a further six months in order to continue our work on terms relating to additional charges in consumer contracts. Further updates on this work will be announced in the Competition and Consumer Enforcement Bulletin (CCEB) in due course.

End of update note

Update Note - 4 April 2011

We have decided to extend the Additional Charges Enforcement Programme (The Programme) for a further six months, to continue our work in relation to Early Termination Charges (ETCs). This is part of the strategic purpose of helping communications markets to work for consumers as set out in Ofcom’s annual plan for 2011/12 and has links to  Ofcom’s wider priorities in relation to strategic consumer switching as set out in that plan.
Under the Programme, we will be finalising our ongoing work in the fixed voice and fixed voice plus broadband sectors where we have been actively engaged with relevant providers. We will also be continuing our discussions with relevant providers in the broadband only sector. In parallel, we will also be monitoring consumer complaints in relation to ETCs in all communications sectors and considering other issues and developments in those sectors. This will help us to identify what our next priority should be under the programme. This may include enforcement action against specific providers, and any such decisions will be announced via the Competition and Consumer Enforcement Bulletin (CCEB).  Updates on the latest outcome of our work in the fixed voice and fixed plus broadband sectors will also be announced in the CCEB in due course.

End of Update Note

Update Note - 11 November 2010

On 25 November 2009, the Supreme Court handed down its judgment in the OFT Bank Charges case1 (‘the Judgment’). The Judgment is relevant to aspects of Ofcom’s Guidance on Additional Charges (‘the Guidance’).

We therefore withdrew the Guidance, to update it in light of the Judgment (and our experience of enforcing the law in this area, in particular in relation to early termination charges).2 Having done so, we have today re–issued the Guidance, as well as an accompanying statement.

The Additional Charges Guidance can now be found here.

The accompanying Statement can be found here.

End of Update Note.

Footnotes

1.- 2009] UKSC 6
2.- The charges consumers are often required to pay for terminating a contract before the expiry of its fixed minimum contract period, see here.

Update Note - 30 September 2010

Ofcom concluded the first stage of its work under the Additional Charges Enforcement Programme (The Programme) in the fixed voice sector in June 2010 and has agreed lower early termination charges (ETCs) with major providers of fixed and fixed plus broadband services. Since then, we have continued work in the fixed voice sector, and have also been considering our next steps, including which sectors we will address next, under the Programme. We have therefore decided to extend the Programme for a further six month period, enabling us to continue with the ongoing work.
As part of our enforcement action, Ofcom may initiate separate investigations of named providers, which will be announced via Ofcom’s Competition and Consumer Enforcement Bulletin.

End of Update Note

Update Note - 17 June 2010

As part of this programme, over recent months, Ofcom has been  in discussions with BT, TalkTalk and Virgin Media  with the aim of ensuring that their early termination charges (‘ETCs’) for fixed voice and voice plus broadband services reflect the costs they save when consumers terminate their contracts early.

After constructive discussions, BT, TalkTalk and Virgin Media, have agreed to significantly reduce their ETCs for fixed voice and voice plus broadband services (without agreeing that their charges were unfair). Examples of the new ETCs for all three providers are as follows:

Early termination charges for popular packages

Provider and packageVoiceBroadbandEarly termination charge before Ofcom statement*Most recent early termination charge*New early termination charge*
BT Weekend-£11.54£7.50£2.00
BT Evening and Weekend-£14.53£7.50£2.50
BT Unlimited Anytime-£16.53£8.00£5.00
TalkTalk Evening and Weekend-£14.44£14.44£3.00
Talk Talk Anytime-£16.98£16.98£3.00
TalkTalk Essential1£18.48£18.48£8.00
TalkTalk Essential2£33.48£33.48£8.00
Virgin Media (cable) Phone3-£11.99£11.99£4.00
Virgin Media (cable) Broadband L3-£12.50£12.50£9.00
Virgin Media (National) Broadband L and Phone M1£25.99£25.99£8.35 (1st month then £6.35)
Virgin Media (National) Broadband L and Phone M2£29.99£29.99£6.63 (1st month then £4.63)

*Charges are monthly for remainder of contract. Prior to it's June charges, TalkTalk's practice was to cap total early termination charges at £70. Virgin Media does not enforce the cable charge shown and it's current approach in practice is to discount the charges to £10/month for each cable service shown.
1 Provided by local loop unbundling
2 Not provided by local loop unbundling
3 Virgin Media cable customers taking phone and broadband will pay both charges

TalkTalk has implemented its lower ETCs on 1 June, and will implement Tiscali’s new ETCs in November 2010. BT’s new ETCs will be in place from mid October 2010 and Virgin Media’s from August 2010.  More information about the new ETCs can be found here: http://www.ofcom.org.uk/media/news/2010/06/nr_20100617

Work under the Additional Charges Enforcement Programme will continue, with Ofcom continuing its work to ensure consumers pay fairer early termination charges across all communications services.

End of Update Note

Update Note – 31 March 2010

Ofcom has decided to extend the Additional Charges Enforcement Programme (The Programme) for a further six month period. This will allow us to continue the ongoing work started when we first opened The Programme.  In particular, we will continue to actively engage with a number of CPs about their terms and conditions, and changes that they need to make to them. Our monitoring of standard terms and conditions, across the communications industry will also continue.

As part of our enforcement action, Ofcom may initiate separate investigations of named providers, which will be announced via Ofcom’s Competition and Consumer Enforcement Bulletin.

End of Update Note

Update Note – 30 September 2009

On 1 April 2009, we opened an enforcement programme (the Programme) to monitor Communications Providers’ compliance with the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) in relation to “Additional Charges”, as set out in the Guidance that we published in December 2008 (see related item). Under the Programme, we are assessing CPs’ standard term contracts and we will take enforcement action where we consider it is necessary and appropriate to do so.

As our analysis is ongoing, we have decided to extend the Programme of active monitoring for a further six month period.

As part of any enforcement action, Ofcom may initiate separate investigations of named communications providers, which will be announced via Ofcom’s Competition and Consumer Enforcement Bulletin.

End of update note

On 12 February 2009, Ofcom opened a pre enforcement programme, which ended on 1 April 2009. Through that programme we met and corresponded with Communications Providers (CPs) to gain an understanding of the changes that they intend to make to their terms and conditions in order to comply with the Regulations and their proposed timetables for introducing those changes.

Following the closure of the pre enforcement programme, we have opened an enforcement programme (the Programme) to investigate compliance with the UTCCRs in relation to Additional Charges, as set out in the Guidance. Under the programme we will take enforcement action as appropriate where we find that CPs are not complying with the Regulations.

Ofcom may take such action under the programme and/or may initiate separate investigations of named providers, which will be announced via Ofcom’s Competition and Consumer Enforcement Bulletin.

If you are a consumer and wish to discuss this case please contact Ofcom’s Advisory Team on 020 7981 3040 or 0300 123 3333.

Case Leader: Nitika Grover ( email: nitika.grover@ofcom.org.uk)
Case Reference: CW/01019/04/09