Investigation into Platinum Telecom UK Ltd regarding allegations of misconduct in selling and marketing of telecommunications services

09 April 2008

Complainant: Ofcom own-initiative investigation
Complaint against: Platinum Telecom UK Ltd ('Platinum Telecom')
Case opened: 13 March 2006
Investigation closed: 12 September 2006
Case closed : 13 March 2008
Issue: Whether Platinum Telecom has complied with the requirements of General Condition 14.5 (compliance with the requirement to establish, maintain and comply with the provisions of a Code of Practice for Sales and Marketing activity)
Relevant instruments
General Condition 14.5 (b) of the General Conditions of Entitlement governing compliance with the provisions of a code of practice for sales and marketing activity (“GC 14.5(b)”).

The obligations relating to Codes of Practice for Sales and Marketing were originally set out by General Condition 14.3. These were renumbered as General Condition 14.5 following other amendments to General Condition 14 which came into force on 19 June 2006. (See note 1 below).

As a result of breaches of Ofcom’s rules concerning sales and marketing of telecommunications services (mis-selling) , Ofcom considered that following its investigation, monitoring of Platinum Telecom UK Ltd (Platinum) was appropriate.

Following the issue of a Notification under s94 of the Communications Act 2003 (the Notification) on 12 September 2006 , Platinum was required to take steps to comply with the rules and to remedy the consequences arising from its conduct by 16 October 2006 .

Ofcom undertook monitoring of Platinum’s compliance for 18 months in order to ensure that Platinum continued to comply and to remedy the consequences of any mis-selling. This specific action was undertaken in addition to Ofcom’s ongoing industry-wide enforcement programme into mis-selling.

Platinum produced monthly reports to Ofcom as part of the compliance process following the investigation. The compliance reports from Platinum have been monitored to confirm whether it has complied with the terms of the Notification.

Ofcom has completed its monitoring in this matter. The compliance reports show that Platinum has taken action to remedy instances of mis-selling to customers on a case by case basis as required.

On this basis Ofcom has now closed the case.

Update Note – 12 March 2007

Mr Peter Roger Lasenby, Director of Platinum Telecom appeared before the City of London Magistrates ' Court on 1 March 2007 in a prosecution brought by Ofcom for a breach of section 144(3) of the Communications Act 2003 (the “Act”). Section 144(3) of the Act relates to the provision of false information to Ofcom in response to a formal information request.

Mr Lasenby pleaded guilty and the Court concluded that at the time he provided information to Ofcom, he was reckless as to whether the information provided to Ofcom was false.

The Court held that Mr Lasenby had a duty to ensure the accurate disclosure of information to Ofcom and Mr Lasenby was fined £2,500. However, given Mr Lasenby's early plea of guilty, the Court discounted the fine by one third, leaving a total fine of £1,750. The Court also awarded Ofcom's costs in full.

Update Note – 1 November 2006

A non-confidential version of Ofcom’s Notification of 12 September 2006 issued to Platinum Telecom under section 94 of the Communications Act has now been prepared and is available from the link below.

End of update note

Summary

Ofcom has closed this investigation and issued a Notification to Platinum Telecom under section 94 of the Communications Act 2003 (“the Act”). Ofcom’s investigation has found that there are reasonable grounds to believe that Platinum Telecom has breached Ofcom’s rules concerning sales and marketing activity. Ofcom’s action follows more than 75 customer complaints and evidence gathered by Ofcom and Hertfordshire Trading Standards.

The Notification issued to Platinum Telecom on 12 September 2006 sets out the breaches and the steps the company must now take. The Notification also requires Platinum Telecom to remedy any consequences arising from its conduct. Platinum Telecom has until 16 October 2006 (the “deadline”) to complete these actions and to make representations to Ofcom.

Ofcom’s conclusions

Ofcom has issued a Notification under section 94 of the Act to Platinum Telecom regarding breaches of Ofcom’s rules concerning sales and marketing.

Specifically, Platinum Telecom has contravened GC 14.5(b) which requires it to comply with the provisions of its Code of Practice for Sales and Marketing for dealing with its Domestic and Small Business Customers (“the Code”). Platinum Telecom has failed to comply with the provisions of the Code by:

(i) Failing to ensure that “copies of this [Platinum Telecom’s] code are available free of charge in various formats on request, including via [Platinum Telecom’s] website http://www.platinumtelecom.com” (page 1 of the Code)[(-1-)];

(ii) Failing to “respect [a person’s] wishes if [the person has] registered with any relevant preference service, including the Mailing Preference Service, the Telephone Preference Service, the Fax Preference Service and the E-Mail Preference Service” (page 1 of the Code)[(-2-)];

(iii) Failing to ensure that “on making contact, [Platinum Telecom’s] representatives will immediately identify themselves, state [Platinum Telecom’s] company name, the purpose of the call and how long it should take” and “[Platinum Telecom’s representatives] must offer only factual and accurate information about [Platinum Telecom’s] services and contracts and must not misrepresent [Platinum Telecom’s] services or those of other companies” (pages 2 to 3 of the Code)[(-3-)]; and

(iv) Failing to ensure that “if [the customer] enter[s] into a contract [the customer] fully understand the terms and [is] sure that this is what [the customer] want[s] to do” (page 3 of the Code).[(-4-)]

Platinum Telecom has until 16 October 2006 to:

(i) Put procedures in place to ensure that copies of its code are available free of charge in various formats on request, including via its website www.platinumtelecom.com (page 1 of the Code);

(ii) Ensure its representatives respect a person’s wishes if the person has registered with any relevant preference service, including the Mailing Preference Service, the Telephone Preference Service, the Fax Preference Service and the E-Mail Preference Service (page 1 of the Code);

(iii) Ensure that on making contact, representatives state clearly that they represent Platinum Telecom and offer only factual and accurate information about Platinum Telecom’s services and contracts. Additionally, Platinum Telecom must not misrepresent its services or those of other companies (pages 2 to 3 of the Code); and

(iv) Ensure that customers entering into a contract fully understand the terms, in particular the length of the contract and the level of the termination fee for terminating the contract within the term (page 3 of the Code).

Under the terms of the notification, Platinum Telecom is required to remedy the consequences of its contraventions.

Ofcom would expect that the steps Platinum Telecom takes to remedy any consequences arising from its contravention may include, but are not limited to, refunding in full and/or waiving all ‘breach of contract’ or other termination charges paid and/or otherwise payable by a customer:

  1. to whom any misrepresentation was made by Platinum Telecom or one of its employees, agents or representatives; or
  2. who was not clearly informed during the transfer process of the length of the minimum contract term and/or the fact that early termination fees were payable and/or the nature of the early termination fee.

Consequences of failure to comply with Ofcom’s enforcement notification

If Platinum Telecom fails to comply with the requirements of GC 14.5(b) and/or fails to remedy fully any consequences arising from its contravention by the deadline, Ofcom may issue an Enforcement Notification under section 95 of the Act and/or may impose a financial penalty (of up to 10 per cent of turnover) under section 96 of the Act.

Note 1

General Condition 14 was amended following consultation by the Notification of Modification to a General Condition “Providing citizens and consumers with improved information about Number Translation Services and Premium Rate Services” published by Ofcom on 19 April 2006, which came into force on 19 June 2006.

General Condition 14.3 was renumbered to General Condition 14.5. The obligations relating to Codes of Practice for Sales and Marketing pursuant to General Condition 14.3 are now imposed by General Condition 14.5. The obligations have not changed, and only the numbering in General Condition 14 has. References to the obligations in General Condition 14.3 and General Condition 14.5 in this bulletin will be referred to as "GC 14.5" for ease of reference, though any references to the operation of these obligations prior to 19 June 2006 will be in respect of General Condition 14.3.

Text published when the case was opened

Ofcom has opened this investigation following evidence passed to Ofcom from Hertfordshire Trading Standards and complaints from residential consumers and small businesses alleging mis-selling of fixed-line telecoms by Platinum Telecom.

Ofcom's investigation will examine whether Platinum Telecom has failed to comply with the requirements of its code of practice for sales and marketing activity. General Condition 14.3 requires that communications providers establish, and comply with, a code of practice for sales and marketing.

Codes which conform with the sales and marketing Guidelines published by Ofcom set out a minimum standard of behaviour in areas such as promotion and marketing, sales, customer contact and the process of entering into a contract with customers.

This investigation concerns the activities of Platinum Telecom UK Limited (company number 05576666). Ofcom notes that there are a number of alternative communication providers using the word ‘Platinum' in their name or brand, who have no link to Platinum Telecom UK Limited. In particular, as far as Ofcom is aware there are no links between Platinum Telecom UK Limited and Platinum Telecom Limited, whose registered office is in Cheshire, or Platinum Telecommunications Limited, whose registered office is in Harley Street , London.

This investigation is part of a sequence of investigations Ofcom has commenced or will be pursuing into misconduct by individual communications providers. These investigations form part of a wider campaign that includes the active enforcement program (CW/00838/05/05) to monitor compliance with regulations designed to prevent mis-selling in fixed-line telecoms and protect consumers from abuses such as ‘slamming'.

Case Leader: Ian Vaughan ( e-mail:Ian.Vaughan@ofcom.org.uk)
Case Referenc: CW/00896/03/06

Footnotes:

1.- This provision reflects paragraph 1.4 and 1.5 of Ofcom’s Guidelines for sales and marketing codes of practice for Fixed-line Telecommunications Services (“the Guidelines”)

2.- This provision reflects paragraph 3.2 of the Guidelines

3.- This provision reflects paragraphs 5.3 and 5.5 of the Guidelines

4.- This provision reflects paragraph 5.5 of the Guidelines