Complaint by BT about WLR transfer orders placed by Scottish & Southern Energy

12 March 2007

Complainant: British Telecom plc (“BT”)
Complaint against : Scottish & Southern Energy (“SSE”)
Case opened: 20 October 2006
Case Closed: 19 February 2007
Issue: Placing transfer orders for Wholesale Line Rental (“WLR”) without obtaining the express consent of customers
Relevant instruments: General Condition 14.5; General Condition 9.3 and Unfair Terms in Consumer Contracts Regulations 1999

Update Note – 12 March 2007

A non-confidential version of Ofcom’s case closure document of 19 February 2007 has now been prepared and is available from the link below.

End of update note

Ofcom has closed this case, concluding that SSE failed to obtain express positive consent from all its customers before placing transer orders, contravening the requirements of the sales and marketing Code of Practice that SSE is required to establish and comply with under General Condition 14.5.

In light of the fact that:

  1. SSE has acknowledged that, in order to comply with General Condition 14.5, it should have obtained consent before placing the transfer orders;
  2. SSE has taken a number of steps during Ofcom’s investigation to reduce the harm caused by their conduct and, specifically, the fact that the significant majority of transfers were not effected;
  3. SSE has taken a number of steps to remedy the consequences of their conduct (as set out in the case closure document); and
  4. SSE has provided a written undertaking to Ofcom that, amongst other things, it will not carry out customer transfers in future without first obtaining positive express consent for the transfers,

Ofcom has decided to take no further action in relation to this matter at this time.

This case reinforces that the transfer of customers between telecommunications services via the use of ‘negative opt-out letters’, which advise customers that they will be transferred unless they object to the transfer, is unlawful in most circumstances, and that Ofcom will take swift action in the event that providers attempt to transfer customers without their consent.

Ofcom’s rules require that customers should know what service they are buying and have the opportunity to make an informed and open choice of provider and that in almost all cases, Ofcom’s guidelines for sales and marketing codes of practice require providers to obtain positive express consent from the customer for the transfer.

Ofcom is currently consulting on extending the requirements of General Condition 14.5 (see www.ofcom.org.uk/consult/condocs/missellingprotection/). As well as proposing to remove the sunset clause and include services using local loop unbundling within the scope of General Condition 14.5, Ofcom is also proposing to amend its guidelines for sales and marketing codes of practice to make absolutely clear that positive express consent is required before transfers take place.

A non-confidential version of the case closure document is currently being prepared and will be published shortly.

Text published when the case was opened

Complainant: British Telecom plc (“BT”)
Complaint against : Scottish & Southern Energy (“SSE”)
Case opened: 20 October 2006
Issue: Placing transfer orders for Wholesale Line Rental (“WLR”) without obtaining the express consent of customers
Relevant instruments: General Condition 14.5; General Condition 9.3 and Unfair Terms in Consumer Contracts Regulations 1999

BT has alleged that SSE placed WLR transfer orders without the full knowledge and consent of its residential customers.

SSE provides a calls-only telephone service to customers under the ‘ talk’ brand supplied by a number of SSE subsidiary companies, including Southern Electric, Scottish Hydro Electric, SWALEC and Atlantic Electricity and Gas. Customers taking ‘talk’ have, until now, had to purchase their retail line rental service from BT. However, BT’s understanding was that, during September, SSE had written to its existing ‘talk’ customers informing them that their retail line rental service would be transferred from BT to SSE unless the customer contacted SSE to object. BT’s view is that placing orders on such terms would equate to “slamming” as the customer has not provided their explicit consent to the transfer.

BT has suggested that such activity may be in breach of General Condition 14.5 (“GC14.5”) which obliges a Communications Provider to comply with its Code of Practice for Sales and Marketing. BT also suggested that SSE may be relying on contractual terms which are “unfair” under the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCRs”).

Since receiving BT’s complaint, SSE has cancelled a number of the transfer orders placed on the gateway before the end of the 10-day transfer window, such that these customers will continue to receive their retail line rental service from BT. However, some of the orders placed by SSE have completed so that certain customer lines have been transferred.

In light of the above concerns raised by BT, Ofcom will now be investigating the activities carried out by SSE in transferring customers to its WLR-based line rental service. As well as the potential issues raised by BT in relation to GC14.5 and the UTCCRs, Ofcom will also consider whether steps taken by SSE to amend its customer contracts were compliant with the requirements of General Condition 9.3.

Case Leader: Martin Hill ( e-mail:martin.hill@ofcom.org.uk)
Case Reference: CW/00924/10/06