Own-initiative investigation into Direct Save Telecom’s compliance with General Conditions 13 and 22 regarding its debt management practices and use of Cancel Other

21 May 2018

Complainant: Ofcom own-initiative investigation
Investigation against: Utilities U.K. Limited trading as Direct Save Telecom (‘DST’)
Case opened: 15 January 2018
Case closed: 21 May 2018
Issue: Ofcom imposes rules on Communications Providers (CPs) which govern how they must act in relation to recovering debt from customers, or disconnecting them in the event they haven’t paid their bills. Providers are also only permitted to block a customer request to switch to another provider in certain circumstances. We will be examining whether DST has complied with its obligations under these rules - specifically General Conditions 13 and 22.
Relevant instrument: General Conditions (GC) 13 and 22

Update note 21 May 2018

Ofcom has now concluded this investigation.

Since the beginning of our engagement with DST in February 2017, DST has made changes to its debt management processes and practices intended to secure compliance with GC 13 and GC 22. In addition, as a result of the formal investigation, DST has provided written assurances to Ofcom, in respect of its future compliance, including that:

  1. DST will make all necessary changes to its policies and procedures to ensure that it only uses Cancel Other in the circumstances permitted in the General Conditions. This includes ensuring that it does not use Cancel Other to prevent a customer in debt from switching to another provider (or to make the customer’s ability to switch conditional on resolution of a debt issue).
  2. DST will ensure that customers are aware about the consequences of continued non-payment before any actual suspension or interruption of service.
  3. DST will maintain an up-to-date published debt management policy on its website at all times and refer to these in its terms and conditions for consumers and business customers.
  4. DST will ensure that its staff are appropriately informed about these process changes, to ensure the assurances are operationalised.

Based on the information gathered and the assurances received from DST, we are satisfied that there is no need for further action and have decided to close the investigation on administrative priority grounds.

We will, however, continue to monitor complaints and may take further enforcement action in the event that DST does not comply with the assurances given above or if we become aware of further compliance issues.

Ofcom rules on Cancel Other and debt management practices

The “Cancel Other” process only allows switching to be stopped in limited, defined circumstances (e.g. where “Slamming” has occurred). It cannot be used for debt management purposes (e.g. preventing an indebted customer from switching, or making completion of the switch conditional on resolution of the debt issue).

For further information please see the industry guidance from the OTA. This guidance will continue to apply to the new General Conditions (PDF, 1.5 MB) when they take effect on 1 October 2018 (in particular Annex 1 to Condition C7).

Please note that the new General Conditions C3.11-C3.12 extend the application of the previous GC 13 to the provision of broadband services as well as landline services. We expect all CPs to make the necessary changes to their debt management processes by 1 October 2018.

End of update note

Following consideration of information provided by DST in response to Ofcom’s initial enquiries, Ofcom has decided to open an investigation into the company’s compliance with GC 13 and GC 22.

GC 13 requires all CPs to, amongst other things, ensure that any measures taken to secure payment from customers or disconnect them following non-payment of bills are proportionate, not unduly discriminatory and give due warning to customers. CPs must also publish these on their websites.

‘Cancel Other’ is a consumer protection mechanism designed to ensure that customers are not switched to another provider without their permission. It should only be used by CPs for very specific reasons and only in certain circumstances, as set out in Annex 1 of GC 22.

GC 22 and accompanying guidance on the use of Cancel Other is available on our website. The full text of the General Conditions (PDF, 454.6 KB) is also available.

The investigation will examine whether there are reasonable grounds to believe that DST’s approach to debt management misuses the Cancel Other process and/or in other respects fails to comply with its obligations under GC 13 and GC 22.

We aim to complete our evidence gathering phase in this investigation by April 2018. We will publish a further update on next steps then.

Case Leader: Camille Seldon (email: camille.seldon@ofcom.org.uk)
Case Reference: CW/01209/10/17