Mobile Phone Companies (Ofcom Supervision)

Lord Vaizey of Didcot Excerpts

Wednesday 5th November 2014 Westminster Hall

[The Minister for Culture and the Digital Economy (Mr Edward Vaizey)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) for bringing this issue to my attention and the attention of the House. Today is not a good day for EE or Vodafone. I will not mention Orange, because it was swallowed up by EE. I am sorry to hear about the huge amount of time that she has had to spend on these constituency cases, and I am very sorry to hear what her constituents have gone through. She put her case incredibly forcefully, and Anne Robinson should be looking over her shoulder in case her job is under threat from the hon. Lady. As a consumer champion and a constituents’ champion, she is second to none.

It is disappointing to hear of occasions when our constituents receive poor service from organisations. I believe—as, I am sure, does the hon. Lady—that providing excellent customer service is one of the hallmarks of an effective, efficient and competitive company. Goodness knows the amount of hours that we spend in this day and age listening to those terrible recorded automated voices when we yearn to speak to someone with a real voice giving us a common-sense answer to our problems. I cannot believe that most companies do not realise how important that is.

Be that as it may, we are talking specifically about mobile phone companies, what the experiences of the hon. Lady’s constituents say about how such companies deal with their customers, and the vulnerability of customers when things go wrong. Obviously I cannot comment on the specific details of the cases that she talked about, although I am familiar with the outline from her speech and from her briefing to my Department. I hope that she takes this in the spirit in which it is intended, but neither my Department nor the independent regulator, Ofcom, has the remit to investigate and resolve individual complaints. As she pointed out, the mobile network operator EE, which is involved in the dispute with her constituent, has—clearly because of this debate—written to her to confirm that it has withdrawn her constituent’s debt entirely and cancelled any debt recovery action.

The debate gives us an opportunity to discuss general points, as the hon. Lady indicated at the end of her speech. I will make some general points on when someone is sold the wrong contract or when contract terms are not clear, what happens when a customer complains to a mobile network operator, and Ofcom’s role in all this. I have made it clear that it is not within Ofcom’s remit to take up individual complaints about poor service from MNOs. Ofcom monitors complaint volumes, publishes quarterly statistics reports to compare and contrast the customer service of different MNOs, and takes action to enforce its complaints handling rules where necessary. Publishing complaints data is a key part of the work to provide useful comparative information for consumers and to drive improvements in the quality of service.

I am pleased to tell the hon. Lady that Ofcom is talking to mobile network providers, including the three major ones—EE, O2 and Vodafone—to understand in more detail how their customer service practices work, and I hope that that will result in improvements across the board in the standards of customer service. Already she has made progress, not just on behalf of her constituent, but on behalf of many others.

All communications providers must be members of an Ofcom-approved alternative dispute resolution scheme. There are two schemes, and providers must make it clear that customers have recourse to those schemes if they need them. Providers must, however, also make it straightforward for their customers to make and escalate a complaint with a mobile network operating company. Companies must have in place and follow complaints procedures that they publicise in their written and online material. If a customer makes a complaint that is unresolved eight weeks after they first make it, or if there has been deadlock and the provider has said that it will not do anything further about the complaint, it can be referred to the ADR scheme to which the provider belongs. I would expect every MNO to resolve complaints in a speedy and prompt fashion, and I am happy to put that on the record.

Alternative dispute resolution is a powerful piece of consumer protection that works. Figures show that it often works for the consumer’s benefit. It allows customers to take unresolved complaints to an independent body to reach an impartial judgement. The provider has to accept this decision, although the customer does not. It is still open to a customer who believes they have been dealt with wrongly by a service provider to take legal action to seek compensation. ADR does not close off that route, should they choose to use it. Legal action is for many consumers very much a last resort, and often it is difficult for them to follow that path. There is also a mechanism by which a customer who is not satisfied with how a case has been conducted by the ADR ombudsman can have the process by which the ombudsman reached their findings examined independently. Ofcom monitors evidence of compliance with complaints handling rules, and takes enforcement action where necessary to ensure that providers are dealing with customer complaints appropriately and fairly.

I want to cover the mis-selling of services, which is when a customer thinks they have signed a contract for one thing and the MNO claims they have signed up for something else. In 2009, Ofcom introduced a range of measures to combat the mis-selling of mobile services, which included clear requirements about obtaining the consumer’s permission and consent, and specifying the type of information that must be made available at the point of sale. Ofcom monitors and enforces compliance with the rules. That has led to positive results, with an initial sharp reduction in complaint numbers to Ofcom from an average of 600 complaints a month to just over 100 a month. That is still far too many, but the reduction has been sustained ever since the rules were introduced.

Ofcom’s rules on contracts are addressed under general condition 9 of the general conditions of entitlement, which is a regime of rules under which telecoms companies must operate in the UK. It is important for companies to have contracts: they offer certainty about revenue streams and allow companies to offer better value to customers. However, customers must be completely clear from the start of their contracts what terms they are signing up to, and that includes price rises, the minimum length of their commitment to the contract and how they can switch providers, if that is what they want to do. General condition 9.6 provides consumer protection in case the contract is varied while it is running. Under that condition, the telecoms provider must tell the customer that it is changing the contract—normally, that is a price rise—because it is likely to cause material detriment. It must give the customer the right to leave the contract without any penalty in response.

In general, it is Ofcom’s role to ensure that the telecoms market and services work well for citizens and consumers. Looking at the more optimistic side of the picture, competition is delivering a wide choice of competitive tariffs in communications markets. Ofcom works to ensure that consumers are able to take advantage of competition and choice, for example by ensuring that they have clear and accurate information to compare services and can switch providers easily when they want to. Ofcom continues to monitor the market, including compliance with regulatory obligations, price trends and complaints handling. It remains focused on ensuring that consumers can exercise choice to access the best deals.

I was horrified to hear what happened to the hon. Lady’s constituent who was referred to a debt recovery firm. Any reference to a debt collection agency is worrying. When a consumer disputes a bill, having the outstanding amount referred to debt collectors can be extremely upsetting. A service provider, like any other company, is of course entitled to go after money that it thinks is owed, but we would expect it to take the dispute into consideration before taking any action. If someone finds that they have been referred to a debt collection agency during a dispute with a mobile network operator, it is important that they continue to follow the complaints procedure, but they should also contact the agency straight away to explain what has happened. That may allow more time for the dispute to be resolved before further action is taken.

The Steering Committee on Reciprocity, with input from the Information Commissioner’s Office, has issued technical guidance to creditors on the conditions under which information about defaults is filed with credit reference agencies. The ICO advises lenders not to file defaults until the consumer has been in arrears for at least three months. The guidance also states that the customer should be given notice of an intention to file a default through a final demand letter. It seems that that was not the case for the hon. Lady’s constituent, which is pretty poor. Customers should also be given a relevant account statement, which should make clear not only the intention to file, but the date of the intended default. The date should allow the customer enough time to respond properly. If the customer fully meets the terms set out in a notice of intention to file a default, the lender should not file the default. Debt collectors must be licensed by the Financial Conduct Authority, a condition of which is that they must obey the FCA’s guidance. Citizens Advice can also advise on problems with debt collectors.

When dealing with large organisations, which may have hundreds of thousands or millions of customers, things may go wrong on occasion. We all live in the real world and will adopt a common-sense approach. I completely agree with the hon. Lady’s bringing the matter to the attention of the House, because what differentiates good companies from those that merely do their job is whether they can deal with mistakes to the satisfaction of their customers. It is appalling that a mobile phone company’s customer should have to turn to their Member of Parliament to resolve a dispute. It is essential for customer growth and prosperity that they retain and grow the good will of consumers.

I understand that EE has resolved its dispute with the hon. Lady’s constituent, but I am pleased to tell her that EE has informed my officials that it is reviewing its internal procedures, unilaterally, to see what lessons can be learned from her constituent’s recent complaint. We do not have any plans to legislate in this area.

[Siobhain McDonagh]

I thank the Minister for his generous response. The debt has now been cancelled and the default notice on my constituent’s credit file may have been removed, but its history is still present and it continues to prevent him from taking out the loan that he needs. I do not know whether the loan is for a business or a home, but even though the matter is now over for EE it is not over for him.

[Mr Vaizey]

The hon. Lady makes a good case. Many hon. Members have experience of constituents having a black mark, as it were, against their credit rating, which, for example, could be due to their bank not putting through a direct debit, so we need to consider the issue to ensure that the hon. Lady’s constituent’s credit rating is restored to its full capacity. I will personally intervene with EE to ensure that it puts its best people on the case and liaises with the hon. Lady’s constituent to make certain that every effort is made to show that he did not bring this debt upon himself and that this black mark is not down to his own actions.

In conclusion, the hon. Lady began her remarks by saying that this is a big day for the mobile operators. We are indeed consulting on whether to introduce national roaming. We have a good system of mobile networks in this country. We have good coverage and are introducing 4G coverage at the fastest rate in the world with the fastest take-up in the world. We have a competitive, keenly priced environment, with people quickly adopting new technology through mobile operators. There are key issues, however, that mobile operators must continue to address. One is customer service and the other is coverage, particularly in rural areas. I look forward to discussing such issues with them. I thank the hon. Lady once again for bringing the matter to the House’s attention.