Own-initiative investigation into Axis Telecom Limited - adherence with its Code of Practice for sales and marketing and conduct relating to the transfer of customers between communications providers.

08 June 2009

Complainant: Ofcom own-initiative investigation
Investigation against: Axis Telecom Limited (Axis Telecom)
Case opened: 16 June 2008
Investigation closed: 15 December 2008
Case closed: 22 May 2009
Issue: Axis Telecoms compliance with General Conditions 14.5 and 1.2 of the General Conditions of Entitlement.
Relevant instrument: General Conditions 14.5 and 1.2 of the General Conditions of Entitlement.

Following the issuing of a Notification under section 94 of the Communications Act 2003 (the Notification) on 15 December 2008; Axis was required, before the deadline of 23 January 2009, to make any representations that it wished to make to Ofcom about the matters contained in the Notification, to comply with the requirements of GC 14.5(b) and to remedy fully any consequences arising from its contravention of GC 14.5(b).

Since this date, Ofcom has undertaken monitoring of Axis compliance with the Notification in order to ensure that Axis had taken appropriate steps to comply with the rules and to remedy the consequences of any mis-selling.

Following receipt of the Notification, Axis has taken appropriate steps to comply with GC 14.5(b).

During its engagement with Ofcom since the Notification was issued, Axis has also explained the steps that it has taken to identify those customers who may have been affected by its previous non-compliance with its Code. Axis also reported on the actions that it had taken to remedy the consequences of its non-compliance. These actions include, providing refunds to customers and releasing customers from contractual obligations without charge, where appropriate.

Ofcom has now concluded monitoring Axis compliance with the Notification. It considers that the actions taken by Axis to remedy its identified non-compliance with its Code and the consequences of its non-compliance demonstrate that Axis has been and is, complying with the Notification. On this basis, Ofcom has now closed the case.

Update note 28 January 2009

A non-confidential version of the Notification issued to Axis Telecom Limited under Section 94 of the Communications Act 2003 on 15 December 2008 has now been prepared and can be found at the link below.

End of update note

Ofcoms investigation has concluded that there are reasonable grounds for believing that since 1 January 2008 Axis has failed, and is continuing to fail, to comply with the provisions of its Sales and Marketing Code of Practice (the Code) by:

  • failing to offer only factual and accurate information about Axis services and contracts and misrepresenting the services offered by Axis and other companies;
  • failing to ensure that upon entering into a contract customers fully understand Axis contract terms and are sure that this is what they want to do;
  • failing to provide customers with higher standards of protection than consumer law requires and not informing customers of their right to cancel at no cost during the switchover period.

On 15 December 2008, Ofcom issued a notification under section 94 of the Communications Act 2003 to Axis (the Notification) regarding its past and ongoing contraventions of Ofcoms rules concerning sales and marketing as set out in General Condition 14.5(b) (GC 14.5(b)).

Axis has until 23 January 2009 to make representations to Ofcom about the matters contained in the Notification, to comply with the requirements of GC 14.5(b) and to remedy fully any consequences arising from its contravention of GC 14.5(b).

Ofcom would expect that the steps Axis takes to comply with the requirements of GC14.5 (b) may include, but are not limited to:

  • ensuring that, during its sales and marketing activities with customers or potential customers, Axis representatives provide only factual and accurate information about its services and contracts and do not misrepresent its services or those of other companies;
  • ensuring that, during its sales and marketing activities, Axis representatives do not misrepresent to potential customers that Axis is part of, working on behalf of, or has a service agreement with the potential customers existing service provider;
  • ensuring that, Axis representatives do not misrepresent the services of other companies, namely BT;
  • ensuring that, Axis does not misrepresent the relationship between Axis and Ofcom;
  • ensuring that when asked by customers entering into a contract, Axis provides only factual and accurate information about the circumstances where minimum contract charges might be applied by either Axis and/or the consumers existing communications provider;
  • ensuring that customers fully understand the terms of the contract and have given their authorisation to transfer their telephone services to Axis;
  • ensuring that customers are provided with higher standards of protection than consumer law requires, or in the alternative that Axis amends or deletes this provision of its Code;
  • ensuring that customers are informed of their right to cancel at no cost during the switchover period and how to use this right; and
  • ensuring that all sales and marketing staff are trained thoroughly on the Code, and that its content and interpretation are explained fully.

Ofcom would expect that the steps Axis takes to remedy any consequences arising from its contravention may include, but are not limited to:

  • allowing those customers who believe they have suffered due to Axis contraventions of its Code to be able to cease their contract with Axis, regardless of the length of contract served, at no cost; and/or
  • to refund any minimum contract charges paid by a customer who was not provided with factual and accurate information during the sales and verification process about minimum contract charges that would be payable where that customer seeks to transfer away from Axis to another communications provider during the minimum term of the contract; and/or
  • to refund any minimum contract charges paid by a customer who was not provided with factual and accurate information during the sales and verification process about minimum contract charges that might be payable where that customer seeks to leave their existing communications provider and transfer their telephone services to Axis; and/or
  • to refund any minimum contract charges paid by a customer who was not clearly informed of their right to cancel during the switchover period and how to exercise that right.

Alternatively, the Notification provides that by 23 January 2009, Axis may make a proposal to Ofcom concerning the remedying of consequences by a specified date to be agreed by Ofcom (although Ofcom is not bound to accept such a proposal).

Ofcom will now monitor Axis compliance with the Notification.

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

Text published when the case was opened

Ofcom has opened an own-initiative investigation into Axis Telecom, following receipt of information gathered through Ofcoms enforcement programme: Monitoring and enforcement of mis-selling and conduct relating to the transfer of customers between communications providers, and complaints received by Ofcoms Advisory Team.

General Condition 14.5 requires that communications providers establish, and comply with, a Code of Practice for sales and marketing. The investigation will examine whether there are reasonable grounds for believing that Axis Telecom has failed to comply with the requirements of its Code of Practice for Sales and Marketing activity. The investigation will also consider whether there are reasonable grounds to believe that Axis Telecom has failed to comply with General Condition 1.2 with regard to Axis Telecoms use of information obtained during the customer transfer process.

Case Leader: Mark Thorndike ( e-mail: Mark.Thorndike@ofcom.org.uk)
Case Reference: CW/00987/06/08