FCS UPDATE

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Rules come into force

Ofcom has introduced tough new regulatory requirements on codes of practice and dispute resolution. Here, General Manager of FCS, Michael Eagle, discusses the changes and highlights others waiting in the wings.

this as important and much of its investigative and compliance activity over recent years has been focused on this area. CPs should be aware that Ofcom has powers to levy stringent fines of up to 10 per cent of turnover for companies that fail to comply. Regulatory requirements in this area arise from the General Conditions of Entitlement, specifically General Condition (GC) 14, which form part of the Communications Act, so compliance is a legal requirement. GC14 had until last month included five main requirements, which CPs are required to comply with:

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• Provision of a ‘basic’ code of practice, including specified information such as the trading names used by the CP, details of the services provided and policies on contract conditions, cancellation and compensation. • Codes of practice for complaints: Setting out the CP’s procedures for handling customer complaints, including referral to a dispute resolution scheme. • Dispute resolution: Providing customers with access to an Ofcom approved dispute resolution scheme where a complaint is not satisfactorily resolved (this normally implies membership of such a scheme by the CP). • Code of practice for Premium Rate Services and Number Translation Services: Providing customers with background information on these services and the CP’s charges for calling these number ranges. • Code of practice for Sales & Marketing: Setting out the

ompliance with code of practice requirements is a key issue for CPs. Ofcom clearly regards

CP’s policies on sales and marketing activity and on entering into a contract.

There have been numerous changes to code of practice requirements since the GCs were first published in 2003 and GC14 (and its associated guidance) is now by far the longest and most detailed section within the General Conditions. A significant change came into force during March. Now, the requirement to provide a code of practice for Sales and Marketing under GC14 has been removed and has been replaced with a new General Condition. The new GC 24 brings into force the following:

• It directly prohibits telecoms providers from engaging in misleading and inappropriate sales and marketing activity and slamming. • It requires telecoms companies to keep better records of their sales and marketing activities and to retain records for a minimum of six months. • It confirms the type 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. • It introduces new rules to make clear when CP’s are allowed to use Cancel Other. Cancelling orders for purposes other than those expressly specified by the regulations are prohibited.

CPs are also required to provide customers with a copy of the new

Michael Eagle

GC24 on request. However, the FCS ‘best practice’ policy will be that members continue to provide a code of practice which explain the requirements of the new General Condition and how the CP complies with them in a more user friendly way. FCS will be issuing revised wording to CP’s using the current FCS template for Sales and Marketing codes which reflect the new regulatory requirements.

There are some further changes in the pipeline which are likely to come into force later this year. These cover retention of call recordings of sales activity, the provision of information to consumers on the consequences of switching (for example, early termination charges) and on complaints handling.

In its original miss-selling consultation, Ofcom made some further proposals on call recording requirements and on the provision of information on contract liabilities (such as cancellation fees) to be included on losing letters and bills. Industry responses indicated that aspects of these were considered disproportionate and Ofcom is re-thinking the requirements in this area. However, these issues will now be picked up in Ofcom’s consumer migrations consultation which is expected in the summer. Although the details are not yet finalised, CPs should expect that regulatory requirements on retention of calls

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relating to sales & marketing activity will be introduced and that there will also be a requirement to provide additional information on the consequences of switching, for example on early termination charges, in losing letters.

Finally, Ofcom is currently consulting on new arrangements for complaints handling which will be implemented later this year. Ofcom is proposing tighter control in this area by requiring that CPs should comply with standards for complaints handling set out in a code drawn up by Ofcom. In its consultation response, relevant FCS members have broadly supported Ofcom’s proposal to ensure that customer complaints are handled effectively and to ensure more consistency across the industry. However concerns have been expressed about the specifics of certain of Ofcom’s proposals. The main concerns are focused on the following areas:

• A requirement to log network faults as complaints.

• The proposed guidelines on website accessibility, which are overly prescriptive. • The requirement to include prescribed messages relating to Alternative Dispute Resolution in CP’s terms and conditions and welcome information which are overly prescriptive and may potentially cause confusion for the customer. • The requirement to include prescribed messages relating to ADR on bills which will be impractical in some instances. • The requirements on retention of call recordings which are impractical and potentially disproportionate.

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