Own-initiative investigation, following information gathered through Ofcom’s enforcement programme: ‘Monitoring and enforcement of the requirements regarding Codes of Practice for Sales and Marketing’

02 July 2008


Complainant: Own-initiative investigation, following information gathered through Ofcom’s enforcement programme: ‘Monitoring and enforcement of the requirements regarding Codes of Practice for Sales and Marketing’
Complaint against: Tesco Stores Ltd trading as Tesco Telecoms (“Tesco Telecoms”)
Case opened: 1 May 2007
Investigation closed: 13 August 2007
Case closed: 24 June 2008
Issue: Whether Tesco Telecoms complied with obligations under relevant consumer protection legislation and the requirement to have and adhere to a Code of Practice for Sales and Marketing activity.
Relevant instrument: General Condition 14.5 of the General Conditions of Entitlement governing the requirement to establish, and comply with, a code of practice for sales and marketing activity and part 8 of the Enterprise Act 2002.

As a result of the operational flaws identified during the investigation in relation to the provision of fixed-line telecommunications services, Ofcom considered that, following the investigation, monitoring of Tesco Telecoms was appropriate.

Ofcom undertook monitoring of Tesco Telecoms for an initial term of at least six months in order to ensure that the improvements made during the investigation were sustained. Ofcom warned Tesco Telecoms that it would re-open the investigation if the evidence indicated non-compliance.

For the following reasons stated below, Ofcom has now completed its monitoring in this matter:

  • Tesco Telecoms now generates only a small number of mis-selling complaints to Ofcom.
  • Ofcom considers that the steps taken by Tesco Telecoms to resolve its operational problems appear to be working effectively, reducing the likelihood of further harm to consumers.
  • The information examined by Ofcom does not suggest that Tesco Telecoms or agents working for Tesco Telecoms have been engaged in systematic or widespread mis-selling to consumers.

On this basis Ofcom has closed the case.

Text published when the investigation was closed

Ofcom has closed its investigation into Tesco Telecoms’ compliance with the requirements of its Code of Practice for Sales and Marketing activity. During the investigation, Ofcom examined the processes by which Tesco Telecoms transferred customers to its Homephone service from other communications providers.

As a result of Ofcom’s investigation operational flaws in these Tesco Telecoms processes were identified. Ofcom considers that these problems were the main reason for the large numbers of cancellations recorded through the ‘Cancel Other’ process and the complaints about Tesco Telecoms earlier in the year.

As part of its investigation, Ofcom has expressed its concern about these failures to Tesco Telecoms. Ofcom also considers that the company took immediate steps to resolve its operational problems.

Since Ofcom opened its investigation, there has been a sharp decline in recorded instances of ‘Cancel Other’ and complaints to Ofcom. Ofcom therefore considers that the steps taken by Tesco to resolve its operational problems appear to be working effectively, reducing the likelihood of further harm to consumers as a result.

The information examined by Ofcom does not suggest that the company or agents working for Tesco Telecoms have been engaged in systematic or widespread mis-selling of telephony services to consumers.

On this basis Ofcom has closed its investigation.

Ofcom will now monitor Tesco Telecoms’ compliance for an initial term of six months to ensure that these improvements are sustained and will re-open the investigation if appropriate. This will be in addition to Ofcom’s ongoing industry-wide compliance monitoring. Consumers who consider that they have been mis-sold fixed-line telephony services by Tesco and wish to register a complaint can do so here http://www.ofcom.org.uk/complain/landline/tescotelecoms/.

Text published when the case was opened

This investigation will examine whether Tesco Telecoms has failed to comply with the requirements of its Code of Practice for Sales and Marketing activity and other relevant consumer law. General Condition 14.5 requires that communications providers establish, maintain and comply with a Code of Practice for sales and marketing.

Ofcom has opened this investigation following a significant increase in the number of Tesco Telecoms’ orders cancelled using the ‘Cancel Other’ process. ‘Cancel Other’ is the industry term for a process whereby (during the 10 working day transfer period) the losing provider is able to cancel an order to switch a consumer to another provider. The use of ‘Cancel Other’ is only permitted in certain circumstances, including where an allegation of mis-selling has been made by the consumer or where the gaining provider fails to cancel a transfer upon the consumer’s request.

Ofcom has also received complaints from consumers who allege they were mis-sold Tesco Telecoms’ fixed-line telephone service. Complainants also allege that Tesco Telecoms failed to cancel orders on request and/or that consumers were forced to contact their existing supplier to prevent the transfer of service to Tesco Telecoms.

This investigation continues a sequence of Ofcom investigations into alleged misconduct by individual communications providers. These investigations form part of Ofcom’s commitment to reduce mis-selling within the fixed-line telecommunications market.

Consumers who wish to register a complaint about Tesco Telecoms' fixed-line telephone service can do so here http://www.ofcom.org.uk/complain/landline/tescotelecoms/.

Case Leader: Ian Vaughan(e-mail: ian.vaughan@ofcom.org.uk )
Case Reference: CW/00957/04/07