Protecting consumers from mis-selling

Ofcom today announced that rules protecting consumers from the mis-selling of fixed-line voice call services will now also cover providers that offer voice and broadband services using full Local Loop Unbundling (LLU) technology.

Mis-selling refers to inappropriate sales and marketing activities including ‘slamming’, where customers can be switched from one company to another without their express knowledge and consent.

Since May 2005 a new General Condition of Entitlement (GC 14.5) has required providers of fixed-line voice call services to establish, then comply with, a code of practice for sales and marketing in accordance with Ofcom’s guidelines. These rules were originally introduced for a two year period.

Since the regulations came into effect in 2005, Ofcom has opened investigations into eleven providers: Economy Calls, FreeCall, Lo-Rate, Orb Communications, Platinum Telecom, Post Office, Scottish and Southern Energy, Tesco, Unicom, Universal Telecom and XLN Telecom.

From January to March 2007 Ofcom alone received some 1,200 complaints related to mis-selling. Therefore, following public consultation, Ofcom has decided that these rules will continue to apply after May 2007.

Ofcom has also extended GC 14.5 to include sales and marketing of full LLU services. LLU refers to telephone lines - running between homes or businesses and the local exchange – that are not connected by BT. The process for switching to, from and between full LLU providers is identical to that of fixed line voice call services.

Separately, Ofcom is carrying out a review of migrations, switching and mis-selling across all telecoms services, including broadband, mobile and cable. This will identify whether a common approach to switching would further increase consumer protection across all telecoms services. This work is due to be completed later this financial year.

Ed Richards, Chief Executive of Ofcom, commented “Mis-selling causes problems for consumers.”

“We want competition and choice to continue to grow, and we want consumers to benefit from these changes. Consumers need to be able to shop around with confidence. Extending these rules and our enforcement activity will protect consumers from inappropriate sales and marketing techniques.”

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