Ofcom set to take on phone sharks

Nick Clark@MrNickClark
Wednesday 18 March 2009 01:00

Ofcom is to launch a new campaign aimed at stamping out mis-selling by landline telecoms companies, especially those that switch customers from a rival provider without their knowledge.The telecoms regulator yesterday unveiled a series of new proposals to crack down on fixed line mis-selling practices such as "slamming," which sparks a thousand complaints a month.

The move followed similar proposals outlined last year to combat misleading selling in the mobile phone market. The regulator yesterday confirmed these rules would be enforced from September. Ofcom chief executive, Ed Richards said: "Ofcom wants to stamp out mis-selling in the telecoms market so that consumers can get the best that competition brings. Our announcements are designed to tackle misleading sales practices in landline and mobile services."

The regulator describes slamming as an "extreme form of mis-selling," when a company switches a customer onto its service without their consent or knowledge. "Slamming is the most complained about issue to us in the fixed line market," Ofcom said.

Companies have forged customer signatures on contracts, agents have falsely claimed to represent rival providers, or told customers they were just signing up for information, before switching them.

Ofcom said it had taken action against companies including FreeCall, Orb Communications, and Axis Telecom, which have all passed themselves off as BT in the past. It also fined Lo-Rate.

The new proposals will simplify the enforcement process. It will move to explicitly ban mis-selling under the general rules that all companies have to adhere to, and force companies to provide clearer advice to the consumers.

The proposals also include forcing companies to record all telephone conversations relating to sales, to help the regulator in enforcement action. Those that break the rules could be fined up to 10 per cent of their turnover.

Ofcom hopes the move will "substantially" reduce the number of complaints over fixed-line mis-selling, but added it will consider other options should that not be the case. The proposals are now open to consultation from industry participants until May 27.

Rules governing mis-selling in the mobile industry will go live in six months. The industry had set up a voluntary code of practice in 2007 to combat general mis-selling, including the cash back scheme.

It failed to reduce the general level of complaints, although cash back complaints have declined, so Ofcom stepped in a year ago to propose new mandatory rules. These will ban providers from engaging in dishonest, misleading or deceptive conduct and make sure those selling their products don't mis-sell.

Others include providing customers with full information over buying their products and making sure the cash back deals aren't unduly restrictive. Providers could also be fined 10 per cent of their turnover if they breach the rules.

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