Telecoms regulator increases powers over rogue sellers

Ofcom says that previous action, including a code of practice for fixed line operators, has not worked and that it needs to more strictly regulate operator activity. Despite the establishment of the Code, it said that it still receives 1,000 complaints a month about 'slamming'.

The market for phone services is highly competitive, and some fixed line providers forcibly switch people on to their services.

"Forms of slamming can include, for example, passing off (i.e. where representatives claim to represent a different company from the company they are actually working for), customers being told they are merely signing for information and then being switched from one CP [communications provider] to another, or forging of customers’ signatures on contracts without the customer being aware," said Ofcom's new proposals.

It said that it will now take more direct action to stamp out the practice. It wants to force telecoms companies to record their sales calls as evidence of a consumer's consent to switching and as a record of the conversation leading to that decision. It also wants to force providers to warn customers at the point of switching that they may still have contractual liabilities to their existing service provider.

Ofcom also said that the rules are not clear enough for consumers and operators, and that some companies may genuinely be confused about what is expected of them.

The regulator is consulting on the plans and has asked for opinions to be expressed to it by 27 May.

It has also addressed mis-selling problems in the mobile phone market, where it says that a code of practice has also failed to curb rogue selling. Though the Code helped to address problems with retailers' cashback schemes, it did not have the same impact on other bad practices.

Ofcom said that it receives 200 complaints a month about general mobile mis-selling, the same volume of complaints it received when the Code was introduced.

It said that general mobile mis-selling cost consumers £21million a year, cashback mis-selling cost £8m a year and that consumers spent £3m worth of time clearing up mis-selling problems.

It will now implement a General Condition (GC) that will apply to all mobile networks from September 2009. That GC will order providers "not to engage in dishonest, misleading or deceptive conduct and to ensure that those selling their products and services do not mis-sell," an Ofcom announcement said.

The GC orders networks to "make sure customers get the accurate information they need when they buy the product [and] make sure the customer is authorised to, and intends to, enter into a contract," Ofcom said.

The new rules place the burden of ensuring that independent retailers comply with the rules on mobile networks themselves. Networks must "carry out due diligence and a number of checks in respect of their retailers to ensure the soundness of the company and its directors", Ofcom said.

The rules will give Ofcom greater powers than it currently has to deal with mis-selling under the Enterprise Act. Ofcom will be able to fine rule-breaking companies and to order them to pay compensation to wronged consumers.