Own-initiative investigation: Monitoring and enforcement of Fixed-Line Providers' compliance with rules concerning their sales and marketing activities and their use of Cancel Other

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Complainant: Ofcom own-initiative investigation
Investigation against: Communications Providers who provide fixed-line telecommunications services and who engage in sales and marketing activity and/or use Cancel Other.
Case opened: 22 September 2014
Case closed: 29 March 2016
Issue: Compliance with the rules related to sales and marketing and use of Cancel Other during the transfer process.
Relevant instrument: General Condition 22 and/or 1.2 of the General Conditions of Entitlement

Ofcom is today announcing the closure of the General Condition 22 (GC22) monitoring and enforcement Programme (the Programme’) that was opened in September 2014.

The Programme was opened to monitor Communication Providers’ (CPs’) compliance with the requirements of GC 22 in connection with their sales and marketing activities. This includes CPs’ conduct following receipt of a request to transfer its customer to a new CP, in particular, assessing the use of the anti-slamming cancellation process (Cancel Other). As part of the Programme, Ofcom has collected and monitored complaints and industry data, examining any evidence which suggests that CPs may not be complying with the rules contained within GC22.

The rules set out in GC22 apply to all CPs in relation to CP migrations, for domestic and small business customers, of:

• Fixed-line Telecommunications Services provided within Openreach’s Access Network;
• Fixed-line Telecommunications Services provided within KCOM’s Access Network;
• Broadband Services provided within Openreach’s Access Network; and
• Broadband Services provided within KCOM’s Access Network

Since opening the Programme, complaint levels, which came down significantly under the previous GC24 monitoring & enforcement Programme, have remained consistently low.  In light of this, we have decided to close down the Programme. We remain committed to ensuring CPs comply with their obligations under GC22 and will continue to monitor complaints regarding non-compliance with GC22 and will continue to use our enforcement powers under the Communications Act 2003 in relation to breaches of GC22, where appropriate.

If you are a consumer and would like advice about issues relating to General Condition 22, please contact Ofcom's Consumer Contact Team on 020 7981 3040 or 0300 123 3333

Update note – 29 July 2015

Ofcom has conducted an investigation into Universal Utilities Ltd’s (trading as Unicom) sales and marketing of fixed-line telecommunications services. This was conducted under the provisions in GC24.3 which applied during the period under investigation (N.B GC24 was incorporated into a modified GC22 in September 2014).

Ofcom issued Unicom with a notification under section 96A of the Communications Act 2003 (“the Act”) on 30 April 2015. This followed an investigation and a determination that there were reasonable grounds to believe Unicom had contravened GC24.3(a) by providing customers with mis-leading information (relating to the payment of ETCs and the effects on existing broadband services of transfers of landline services to Unicom).

Following our careful consideration of Unicom’s written and oral representations, Ofcom issued Unicom with a Confirmation Decision under section 96C of the Act on 29 July 2015. This decision confirms that Ofcom is satisfied Unicom contravened GC24.3 in some of the respects notified and the imposition of a penalty on Unicom of £200,000 in respect of its contravention. It also confirms the steps Unicom must take to comply with the rules now in GC22 and to remedy the contravention.

The scope of this investigation had been revised during its course as new information became available. In particular, Ofcom discontinued the investigation of possible contraventions of GC9.3, GC9.4 and GC24.6. Ofcom makes no findings in these regards.

Further details of the investigation can be found here.

End of Update note

Update note – 22 June 2015

Today the new harmonised switching process takes effect under General Condition 22. The new harmonised switching process extends the gaining provider led switching process to broadband migrations on both Openreach’s and KCOM’s Access Networks. As a result, end-users will no longer be required to contact their existing provider to obtain a migration authorisation code (MAC) in order to switch their broadband service to a Gaining Provider. Instead, they will only need to contact the Gaining Provider to facilitate the switch.

The rules set out in General Condition 22 now apply to all Communications Providers in relation to Communications Provider Migrations, for domestic and small business customers, of:

• Fixed-line Telecommunications Services provided within Openreach’s Access Network;
• Fixed-line Telecommunications Services provided within KCOM’s Access Network;
• Broadband Services provided within Openreach’s Access Network; and
• Broadband Services provided within KCOM’s Access Network

In light of these changes, Ofcom has decided to continue its programme of active monitoring and enforcement for a further 12 months until 22 June 2016. During this period Ofcom will continue to collect and monitor complaint and industry data, examining any evidence which suggests that Communications Providers may not be complying with the rules contained within General Condition 22.

This investigation will also monitor communications providers conduct following receipt of a request to transfer its customer to a new communications provider, in particular assessing the use of the anti-slamming cancellation process (Cancel Other).

Ofcom will open investigations and/or take direct enforcement action under this programme where required.

The full wording of General Condition 22 can be found here.

End of Update note

Update note – 20 March 2015

Ofcom has decided to extend this programme for a further three months to 20 June 2015. This is when the new harmonised switching process takes effect.

If any formal enforcement action is taken as a result of the work undertaken in this programme, we will publish separate bulletin entries as appropriate.

End of update note

Following the publication of the Consumer Switching Statement on 20 December 2013, General Condition 24 has been revoked and is replaced by a modified General Condition 22 which came into force on 20 September 2014.

Accordingly, we have today closed the General Condition 24 Monitoring and Enforcement Programme and opened a new General Condition 22 Monitoring and Enforcement Programme in its place.

Background

The modified General Condition 22 incorporates the provisions previously set out in General Condition 24 and introduces some new rules. GC 22 applies to all companies who sell fixed-line telephone services to domestic and small business customers.

The full wording of General Condition 22 can be found here.

Amongst other things, GC22:

• prohibits inappropriate sales and marketing activity;
• sets out the type and level of information that needs to be made available to new customers both at the point of sale and after the sale has been concluded (but before the service has actually been transferred). This includes providing important information about the key terms and conditions of the service, including contractual liabilities and cancellation rights;
• specifies record-keeping requirements for sales and marketing activities, and customer consent to enter into a contract;
• sets out certain rules in relation to Working Line Takeover Orders;
• sets out rules in relation to the use of “Cancel Other” (about which further information is set out below).

Use of Cancel Other under GC 22

GC 22 includes rules about when providers are allowed to cancel orders placed by others (known in the industry as Cancel Other).

Cancel Other is a consumer protection mechanism designed to ensure that customers are not switched to another provider without their permission.

Under GC 22, Cancel Other must only be used by the losing provider in the permitted circumstances as set out in Annex A1.2 of General Condition 22.

Cancel Other should not be used by the losing provider to frustrate the transfer process, particularly in situations where, for example, the customer has not yet paid their bill, the notice period has not been served or where disconnection or termination charges apply.

These charges should be included in the final bill, and settled in accordance with standard payment terms.

General Condition 22 Monitoring and Enforcement Programme

To ensure providers comply with the requirements of GC22, Ofcom has launched this monitoring and enforcement programme which will collect industry data and monitor complaints about providers.

Ofcom will open individual investigations and/or take direct enforcement action under this Programme where required.

If you are a consumer and would like advice about issues relating to General Condition 22, please contact Ofcom's Consumer Contact Team on 020 7981 3040 or 0300 123 3333

Case Leader: Stephen Green (e-mail: Stephen.green@ofcom.org.uk)
Case Reference: CW/01137/09/14