Telecoms Industry (Mis-selling)

Lord Vaizey of Didcot Excerpts

Wednesday 26th November 2014 Commons Chamber

[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]

I was going to sum up by answering the right hon. Gentleman’s three questions—

[John Healey]

I beg your pardon.

[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.