Ofcom warns of crackdown on mis-selling
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Regulators are threatening an intensive crackdown on mis-selling and other abuses in the UK telephone and broadband markets.
Ed Richards, the new chief executive of Ofcom, said on Wednesday that the media and telecommunications watchdog was keen to avoid a dramatic loss of consumer confidence in the industry, by punishing companies that broke rules covering the supply of broadband and phone services.
In a blow for ITV, he also ruled out allowing the commercial broadcaster to reduce its television programming for children in the near term, hampering its ability to increase advertising revenue by focusing more output on popular daytime shows.
Mr Richards acknowledged consumer confidence in the telecoms sector had been dented since regulators reached a settlement with BT requiring the former state monopoly to open its network to rivals. This has considerably increased competition in both the fixed-line telephony and broadband markets.
He said it was important to ensure liberalisation was not followed by a spate of mis-selling cases and other abuses, pledging to make it a priority to strengthen public confidence in the telecoms markets.
He signalled that companies had been given their chance to comply with Ofcom rules, and the watchdog was willing to consider big fines against those that broke them.
Mr Richards, who became Ofcom’s chief executive in October, told the Financial Times: “We have been pretty generous over time and now is the time to start saying: ‘Come on guys, get into line, make sure you comply with the codes. Sell aggressively, sell well, compete aggressively, compete however you want to, but do sell in a way which is going to build consumer confidence not undermine it.’ ”
Ofcom this week announced an investigation into the Post Office’s fixed-line phone service over claims of “slamming”, where customers unwittingly have their accounts moved between suppliers. Mr Richards predicted the slamming problem could soon manifest itself among broadband companies.
Ofcom will introduce rules in February designed to make it easier for people to change their broadband providers and benefit from the price war that has raged since April.
Mr Richards complained that some people had been left in “purgatory”, with no broadband service, because their old providers failed to give them codes offering them seamless transfers to new suppliers. He said he was not planning to “go after companies” for the sake of it, but would aim to ensure a “level playing field” in compliance with Ofcom’s rules, both to reinforce competition and enhance consumer confidence.
Mr Richards also said Ofcom would be reviewing the future of public-service broadcasting, including children’s shows, before the switchover from analogue to digital TV in 2012.
Ofcom in October rejected ITV’s attempts to cut programmes for children, which do not generate much revenue, and Mr Richards rejected the case for changing the watchdog’s stance in the near term. He said the key to good regulation was to “do a deal and stick to it. You can’t come back in six months and say we want to cut it now.”
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