Telecoms Industry (Mis-selling)
John Healey (Wentworth and Dearne) (Lab)
I am grateful for the opportunity to secure this debate, as this is a shameful story. Stephen Jones is a vulnerable man who was ripped off by a big telecoms company, Unicom, which refused to admit it had broken the rules or treated him badly. He has said to me, “They’re asking me to pay thousands of pounds for a service I didn’t receive. I wouldn’t want anyone else to go through this. It’s a disgrace.” He is right. I want justice for Stephen Jones, and together we want to help prevent other people from being treated the same by Unicom.
From the very earliest days of this dispute, Stephen Jones has been supported and represented by a remarkable friend, who for nearly two and a half years has battled on his behalf with Unicom and with the ombudsman. He does not want any public recognition for his role, so let us just call him Ray.
Stephen and Ray came to see me in July, and as so many constituents do they came to me, their MP, as a last resort. They had tried everyone else and they had been failed by everyone else. I may not succeed, but I will do everything I can to get these indefensible charges dropped and I will not—will not—give up this fight, and I hope that during this debate the Minister will understand why I am so angry.
Stephen Jones is 70. He is a vulnerable man who is highly susceptible to buying and hoarding things he does not need. He describes himself as trusting and gullible. I describe him as one of the kindest, nicest people I have met. For over 40 years he ran a small salon in Station street, Swinton called Stephen Hairdressing. Earlier this year, he broke his back and stopped working. He is not able to read or understand complex detail of the type found in consumer contracts, and, as his daughter says, “He gets bamboozled with information which is why he always likes to see things in black and white”, so he can then check them with his family or with Ray.
Stephen has not been a well man for many years and now his daughters are getting very worried about the effect this dispute with Unicom is having on his health. They say he is withdrawn, anxious and depressed, and it is even affecting his relationship with his grandkids, and no wonder because out of the blue, and five months after he had the contracts with Unicom cancelled, he was hit with a bill for £3,000, and now he is being threatened with debt collectors, courts and bankruptcy. The detail of his dealings with Unicom is far worse and the experience he has had with the ombudsman is little better.
I have serious criticism of Unicom’s conduct in four respects. The first is mis-selling. Mr Jones was sold two telephone and two broadband packages for his shop and his home, an extortionately expensive service that Mr Jones did not want, had not asked for and could not use. The culprit was Mark Jennings of Unicom. He cold-called on Mr Jones in his salon on 25 May 2012. Mr Jones was on his own, he was busy, he was under pressure and he asked Mark Jennings to put the detail down in writing, but Mark Jennings would not do this.
Stephen Jones was told that Unicom services would be cheaper, yet Mr Jones already had free broadband with Orange and a reasonable telephone rate via XLN. In fact, Mr Jones found that Unicom’s charges for line rental, calls to mobiles and landlines and paper billing were all much higher than XLN’s, especially calls to local or national landlines, which worked out nearly three times more costly for Mr Jones than the call charges he was paying to XLN. Mr Jones was told that the broadband service for the shop would allow clients to book online, yet he had no computer, no website, no knowledge of the technology and no need for the service. His salon is an old-style salon in a traditional ex-mining village with largely elderly clients. The cost was £72 per month, or £2,500 for each of the broadband lines over the three-year contract period.
The second criticism relates to slamming, which Ofcom describes as
“the most extreme form of mis-selling, which occurs when a consumer’s service is switched to another provider without their consent”.
Mr Jones’s internet service was switched to Unicom by obtaining his individual migration authorisation code—known as a MAC code—without his authorisation. That broke Ofcom’s industry rules, which are set out in what it calls its “general conditions” to protect consumers in the communications sector. Crucially, it also sidestepped a further decision point for consumers, and therefore weakened the cooling-off period protection. This might prove to be part of a pattern in Unicom, because in one phone call that Ray made on Mr Jones’s behalf to talk about the way in which his MAC code had been obtained, the manager he was talking to turned to a colleague and said, “They’ve done it again.”
The third criticism relates to cancellation. Ray’s detailed notes confirm that he had a conversation with Unicom’s Sheffield office on 17 July 2012, 15 days after Stephen Jones had received the paperwork. In the call, the company accepted that a mistake had been made, knew that the MAC code had been transferred without reference to Mr Jones and described its contracts with him as “dead in the water”. Yet it was only after 14 chasing e-mails and 83 days that the contracts were indeed cancelled.
To be fair to Unicom, no termination fees were applied at that point, as a good-will gesture to Mr Jones, to allow him to return to XLN. Mr Jones paid the telephone element of his final bill in full, but felt aggrieved that that bill also included the sum of £184.80 for the entirely unused broadband service. Ray then took that matter up with the ombudsman on Stephen Jones’s behalf. Unicom offered to waive the £184.80 charge if the case was not pursued with the ombudsman. However, because Mr Jones felt that the charge was unfair, and because the case had already been lodged with the ombudsman, he did not withdraw his complaint.
I have to say that, from start to finish, it felt as though the ombudsman was almost acting as an agent of Unicom. Given that the ombudsman states that its job is
“to investigate complaints fairly by listening to both sides of the story and looking at the facts”,
Mr Jones certainly felt that it had failed him. It failed to appreciate that it was dealing with Ray rather than with Mr Jones himself, which is likely to have led it to believe that it was dealing with a smart, sophisticated customer rather than with a simple, kindly, elderly man. The ombudsman failed to grasp that Mr Jones was no longer a Unicom customer at the time of the investigation. It failed to show that it had examined fully certain areas that were central to the case: the dealings with Unicom’s Sheffield office; the illegal way in which Mr Jones’s MAC code had been obtained; and what the salesman, Mark Jennings, must have said to Mr Jones in the salon about the cost of the Unicom contracts. The ombudsman failed to uphold any aspect of Mr Jones’s complaint, ruling instead in Unicom’s favour and going further, saying that the company had done nothing wrong and need not make any concessions.
That brings me back to Unicom and the fourth area of serious criticism. Unicom took advantage of the ombudsman’s report to slap termination fees on all four contracts—almost £600 for each one. This was fully five months after the contracts had been cancelled. Interestingly, Amy Tytler, an investigation officer in Unicom’s compliance department, confirmed to me in a letter last month that the termination fees
“were contained within the invoice raised on the 11th February 2013, prior to the issue of the Ombudsman’s Report dated the 15th February 2013.”
So the company knew the content of the ombudsman’s report before it was published. This raises questions. The ombudsman is a body entirely funded by the industry through subscriptions and case fees. For the consumer, it comes across as too toothless to investigate impartially, and too close to the companies to deal properly with complaints against them.
For some reason, for more than a year all went quiet with Unicom, until Ray e-mailed the ombudsman service on 12 May 2014 and happened to mention that the company had not been in touch. The very next day Mr Jones received a call from Unicom. He was in hospital, having just broken his back in three places, and he took a call from the company demanding immediate payment of all four full-scale termination fees totalling more than £3,000. This was 522 days since Unicom had had any contact with Mr Jones.
In July this year Mr Jones and Ray came to see me and I have been on the case with Unicom, Ofcom, the Minister and the ombudsman since. The balance on the account is now over £3,500 and rising by £50 a month. In August Unicom offered to reduce this to £1,399.33. This is totally unacceptable. It is unacceptable after what Mr Jones has been through and after Unicom had said two years ago that it would waive all charges.
Ofcom has launched an official formal investigation into Unicom, which it tells me it expects to complete in February. The excellent BBC radio programme for consumers, “You and Yours”, has done four separate reports on Unicom in recent months. It tells me that Unicom stands out for the number and the type of complaints it gets. The problems come especially from small businesses such as cafés, garages, florists and hairdressers. The Minister told me last month that “the Department take inappropriate sales and marketing very seriously”.
The dreadful and still continuing experience of Stephen Jones at the hands of this predatory company raises serious questions. Is the present system of protection and investigation strong enough? Is the ombudsman too cosy with the companies that fund it? Is Ofcom tough enough to bring into line rogue companies that rip off and bully customers such as Mr Jones? This Unicom investigation will be an important test of Ofcom, and I trust that the Minister is following it closely.
For now, for Mr Jones, I ask the Minister in his important position if he will personally do three things. First, will he ask the ombudsman whether it is satisfied with the way in which the service has handled Mr Jones’s complaint? Secondly, will the Minister ask Ofcom to confirm that Mr Jones’s case will be built into its current investigation of Unicom? Thirdly, and much the most important, will the Minister personally raise this debate with the chief executive officer of Unicom and ask him now to draw a line, drop the charges and apologise in full to Mr Jones?
The Minister for Culture and the Digital Economy (Mr Edward Vaizey)
I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this important debate on behalf of his constituent Stephen Jones. The right hon. Gentleman has put the case extremely forcefully and anyone listening to the events he recounted will be shocked at the way Unicom has behaved. I was astonished when I heard his version of events, which I have no reason to doubt, particularly as it was recounted in this Chamber and given his record as an upstanding constituency MP. It seems astonishing that a telecoms company would pursue a man in his 70s, who has broken his back, for this sum of money and not understand that any right-thinking person would want to make a good-will gesture. Having won its war with Mr Jones through the ombudsman, it should recognise that its corporate social responsibility should dictate that it should waive this bill.
The right hon. Gentleman knows full well that neither my Department, nor the regulator, Ofcom, has a remit to investigate and resolve complaints on behalf of an individual, although given the events as they have been recounted one is sorely tempted. It would not be right for me to overturn the ombudsman’s judgment, and I could not do so in any case, but I will comment on the three points the right hon. Gentleman made at the end of his speech. He rightly wanted not only justice for his constituent, but to raise matters of importance arising from how this case was handled and to question the robustness of consumer protection in the telecoms market. So it is important that I speak a little about the system in place.
There are rules to prevent consumers from being sold the wrong contract, or a contract where the terms are not clear or where complaints to a telecoms operator with whom one has a contract are not handled appropriately. Ofcom takes these complaints and breaches very seriously. As the right hon. Gentleman pointed out, Ofcom has launched an investigation into Unicom’s sales and marketing practices. I can answer one of his questions immediately. He mentioned that Ofcom is hoping to report in February 2015 and that is indeed the case. I can confirm that it will take into account Mr Jones’s experiences, along with the other complaints it has received about Unicom’s sales and marketing practices. Let us be clear: it is not in Ofcom’s remit to take up an individual complaint, but it can take into account the volume of complaints and the nature of complaints. That process will obviously take into account the experience that Mr Jones has gone through.
On the ombudsman and how it works, all communication providers must be members of an alternative dispute resolution scheme approved by Ofcom and they must also make it clear that customers have recourse to such a scheme if they wish. Such a service—the ombudsman service, in this case—is meant to provide an independent, impartial and cost-effective way to resolve disputes outside the courts. The ombudsman is meant to be an expert in dispute resolution. I suspect this will not be taken up in this case, but I have to say that going to an ombudsman does not preclude a customer from going on to take legal action. The remit of the ombudsman is to investigate complaints fairly and decide what action, if any, should be taken when a consumer and a communications company cannot agree.
Providers must also make it straightforward for their customers to make an escalated complaint within that provider, before they go to an ombudsman. Ofcom also looks at that. It looks at compliance with complaints handling rules and it carries out enforcement where it thinks that a telecoms company has not properly set up its own internal complaints procedure.
In most cases, the ombudsman proves to be a powerful and effective piece of consumer protection. It does work, and figures show that it often works to the consumer’s benefit. It allows customers to take unresolved complaints to an independent body and to secure an impartial judgment. The provider has to accept the decision, but the customer does not have to. I understand that, in this case, the constituent did not accept the ombudsman’s final decision. I said that Mr Jones is free to take any other action he considers appropriate although, given the context outlined by the right hon. Gentleman, Mr Jones may not choose to take that route.
There is also a mechanism by which a customer who is dissatisfied with the way in which a case has been conducted by the ombudsman can have the process by which the ombudsman reached its findings independently examined. Under general condition 24, which is part of the general conditions for telecommunications companies, where a customer is transferring a fixed-line telecommunications service between communication providers, the gaining communications provider—in this case Unicom—must not engage in dishonest, misleading or deceptive conduct; engage in aggressive conduct; contact the customer in an inappropriate manner; or engage in slamming. Ofcom is investigating whether Unicom has breached those obligations in many cases.
I would be happy to go back to the ombudsman, but as the right hon. Gentleman is aware from the correspondence that we have had, the ombudsman maintains that, under data protection rules, it cannot share his constituent’s information with me. I suggest that his constituent gives either him or Ray the authorisation to share that information, and that they then come to a meeting with me, and hopefully the ombudsman, to see whether we can get some clarity as to how the ombudsman conducted this particular case.
The same general condition also sets rules for the information to be communicated at the point of sale. That includes information on the identity of the legal entity with which the customer is contracting; their contact details; details of the service provision; the key charges, including minimum contract charges and any early termination charges; payment terms; the existence of any termination right, and so on. As I have said, Ofcom runs a monitoring and enforcement programme to monitor industry compliance with those rules, and it will be looking to Unicom to provide that.
Ofcom also looks at contracts under general condition 9, and compliance with that condition is another aspect of the investigation that Ofcom is undertaking. It is important for companies to have contracts, as they offer certainty, but customers must be completely clear from the start of the contract what they are signing up to.
The general condition also provides consumer protection to ensure that conditions or procedures for contract termination do not act as disincentives for consumers against changing their communications provider. Communications providers are also prohibited under general condition 9.4 from including terms in any contract preventing the consumer from terminating the contract before the end of the agreed contractual period without compensating the communications provider, unless the compensation relates to no more than the initial commitment period.
In the UK, we are lucky that competition delivers a wide choice of competitive tariffs in communications markets. Ofcom has worked to ensure that consumers are able to take advantage of competition and choice. That does include clear and accurate information, so that consumers can compare services appropriately. Ofcom continues to monitor the market, including compliance with regulatory obligations, price trends and complaints handling, and it remains focused on ensuring that consumers are able to exercise choice to access the best deals for them. Consequently, in March 2014, Ofcom opened a formal investigation into Unicom following complaints from consumers, as well as an assessment of evidence submitted by Unicom during Ofcom’s inquiry phase to decide whether to open the investigation. Ofcom is investigating whether Unicom has complied with its obligations under general condition 24, which relates to how telecoms companies should engage in sales and marketing involving landline services. As has been mentioned, Ofcom rules explicitly prohibit companies from engaging in the mis-selling and slamming of landline services.
As the right hon. Gentleman said, Ofcom is seeking to conclude its investigation in February 2015, and we must await the outcome. I would be happy to discuss the handling of the case with the ombudsman, but I need authorisation if I am to access Mr Jones’s data, so he must nominate someone to share that.
John Healey
I am grateful to the Minister for the way in which he has responded to the debate and for his offer, which I will discuss with Mr Jones and Ray, to meet them, me and the ombudsman. Will he take up my final request that he draws the attention of the Unicom chief executive to the debate and encourages him, as I do, to consider dropping the charges in their entirety?
Mr Vaizey
The right hon. Gentleman has no need to do so.
I clarified earlier that Ofcom will include Mr Jones’s case in its deliberations. However, let me ponder whether I take the step of phoning the chief executive. I am sure that he has been alerted to the debate, so he will have heard my remarks and observed how forcefully the right hon. Gentleman put his case on behalf of his constituent. Any right-thinking company, given the bad publicity that must have arisen from the case, would wish to do the right thing. While I will ponder the right hon. Gentleman’s request, I hope he will forgive me if I do not give a final answer now, as that point was raised only this evening, although I understand where it comes from.
I once again thank the right hon. Gentleman for securing the debate and congratulate him, even though he is my elder and better, on making such a forceful case. He has been a Member for 18 years, and the way in which he set out his argument, given the volume of cases with which he must have dealt over almost two decades, shows that this will be one of those that has made him the most angry. If that does not get across the message loudly and clearly that Mr Jones appears to have been incredibly unfairly treated, I do not know what will.
Question put and agreed to.