Ofcom to strengthen rules on mis-selling

Industry regulator Ofcom has set out new proposals to stamp out slamming and other forms of mis-selling in the fixed line telecoms market.

It has also confirmed the introduction of new rules to stop misleading sales practices in the mobile market.

Slamming – where a consumer is switched to another provider without their knowledge and/or consent – is the most complained about issue to Ofcom in the fixed line market, averaging at almost 1,000 complaints each month over the last year. In the mobile market, Ofcom receives a large number of general mis-selling complaints where consumers have been given false or misleading information when purchasing services.

The proposals for the fixed line sector and new rules for the mobile sector are designed both to protect consumers and to enable Ofcom to take quicker and more effective action against communications providers that break the rules.

Proposed new rules for the fixed line market

Call recordings

Under the proposed new rules, communications providers would have to keep better records, including voice recordings of all telephone conversations relating to sales. Better quality records will assist Ofcom in taking enforcement action against providers that are engaging in mis-selling and making it more effective.

Explicit regulations

Ofcom proposes to simplify the regulations by explicitly banning mis-selling under the General Conditions – a set of rules that all communications providers have to adhere to. Communications providers breaking the rules could ultimately be fined up to 10 per cent of relevant turnover.

Clearer consumer advice

The proposed new rules would require communications providers to give better information to consumers by reminding them that there may be consequences from switching, such as possible termination charges for leaving a contract early.

Ofcom expects the proposals, if implemented, to substantially reduce the levels of complaints that it receives about fixed-line mis-selling. If it does not then Ofcom may consider other options.

The consultation on fixed line mis-selling can be found here: www.ofcom.org.uk/consult/condocs/protecting_consumers/ and closes on 27 May 2009.