HomeInsightsMis-selling regulation not necessary, operators say

    Mis-selling regulation not necessary, operators say


    We're already acting, say Orange, Vodafone and O2

     We’ve had some reaction to our story about Ofcom moving to  a fines based system to enforce operator compliance around mis-selling.

    Not surprisingly the operators show willing to sort any problems out, pointing to the efforts they have made to do so far – and broadly reject the notion that Ofcom needs to go to formal regulation to deal with this issue. They point out that they all signed up to the voluntary code of conduct last year that was designed to deal with these matters. They also highlighted the fact that many of them have dropped dealers, in Orange’s case over 100 of them, that were deemed to be a problem. Vodafone and O2 both specifically defended their record on cashback, in O2’s case pointing the figures at other operators. Most of the responses concentrated on cashback and “slamming”, when in fact Ofcom’s consultation document highlights the fact that the issues run wider than these two areas.

    In fairness to the operators they also pointed out that it is early days in the consultation programme, and they have not had a chance yet to respond to Ofcom’s consultation proposals.

    An Ofcom spokesperson said that it was true that operators had signed up to a code of conduct, but it was also true that complaints had increased after the code of conduct was introduced, not decreased. Asked if she thought operators were doing enough about this, the Ofcom spokesperson said merely that complaints had increased, and Ofcom now deemed it appropriate to propose further action. “We are proposing an enforceable code and we had to do so because complaints are not going down,” she said.

    Orange told us:
    "Orange is very aware of the problems mis-selling can cause for our customers and we welcome Ofcom's support in dealing with the issue. Many of the proposals Ofcom has announced today build upon the measures we voluntarily introduced last year, via the industry Code of Practice, in order to protect our customers.”

    “Orange has already implemented significant changes to the terms and conditions we set for indirect dealers, regulated how cashback deals and outbound calling are conducted and based our business standards on advice given by Ofcom. Orange has been very proactive in addressing any issues, including ceasing to deal with over 100 dealers who did not meet the high levels of customer service we demand from our dealers.

    “As such, we feel that formal and costly regulation is unnecessary as mis-selling is an issue that Orange, and the rest of the industry, is committed to addressing with robust action already being taken.

    “We will consider these new proposals in detail and respond accordingly but, in the meantime, we will continue to work with Ofcom, and our dealers to ensure that Orange customers can be confident in the agreements made.”

    Vodafone said:
    “Vodafone care about  the issue of cash-back, as we realise that there has been consumer harm, and  welcomes Ofcom consultation.
    However: Vodafone does not offer cash-back deals. Problems have arisen largely due to [a] limited number of independent dealers.   
    Vodafone has acted sympathetically to those customers who approached us after problems with their cash-back deals (e.g. offering heavily discounted line rental)   
    We have not yet had time to study Ofcom’s recommendations in detail, but welcomes any action against any mis-selling in mobile  marketplace."

    O2 told us:
    “We welcome Ofcom’s consultation.  We know from Ofcom's figures that other operators generate on average around 10-15 times more cashback complaints per net connection than O2.  It’s important that consumers are protected against the minority in the market who are causing problems.  We think Ofcom should be tough on offenders – but not burdensome on those that are trading responsibly.”  

    Os also forwarded a press release highlighting action against two company directors: Jeff Rees, a former director of Eazyconnect Limited; and Richard Thorpe, a Director of Shieldmp3 – both based in South Wales – whose companies O2 claims were mis-selling, or ‘passing off’ as O2 and infringing its trademark rights when selling mobile phone insurance.  The move follows legal action taken last year against Landmark Marketing Services Ltd and Communications Direct Ltd, who both admitted liability for trademark infringement and passing off related to the mis-selling of mobile phone contracts, a practice known as ‘slamming’.