UK regulator Ofcom unveiled new proposals to stamp out slamming and other forms of mis-selling in the fixed-line market. The regulator also confirmed the introduction of new rules to stop misleading sales practices in the mobile market. Slamming, where a consumer is switched to another provider without their knowledge and/or consent, is the most complained about issue to Ofcom in the fixed-line market, averaging almost 1,000 complaints each month over the last year. In the mobile market, Ofcom receives a large number of general mis-selling complaints where consumers have been given false or misleading information when purchasing services. Despite the introduction of a voluntary code of practice in July 2007 in the mobile sector, Ofcom said it had not seen a significant reduction in consumer complaints, prompting the regulator to introduce the new rules.
Under the proposed new rules for the fixed-line market, communications providers would have to keep better records, including voice recordings of all telephone conversations relating to sales. Better quality records will assist Ofcom in taking enforcement action against providers that are engaging in mis-selling. Ofcom also proposes to simplify the regulations by explicitly banning mis-selling under the General Conditions, the set of rules to which all communications providers have to adhere. Communications providers breaking the rules could ultimately be fined up to 10 percent of relevant turnover. The proposed new rules would require communications providers to give better information to consumers by reminding them that there may be consequences from switching, such as possible termination charges for leaving a contract early. Ofcom opened a public consultation on the new rules, and comments can be submitted until 27 May.
For the mobile market, the new rules will come into force in September 2009 after which Ofcom will start an enforcement programme to monitor communications providers. If providers breach the rules they could be fined up to 10 percent of relevant turnover. The rules state that providers must not engage in dishonest, misleading or deceptive conduct and put provisions in place to ensure that those selling their products and services similarly do not mis-sell; make sure the customer intends and is authorised to enter into a contract; make sure consumers get the information they need at the point of sale; make sure that the terms and conditions of cash back deals offered by their retailers are not unduly restrictive; and carry out certain due diligence checks in respect of their retailers.
