New code of practice for mobile phone providers

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Ofcom set out a voluntary code of practice to stamp out mis-selling.

There are more than 66 million active mobile accounts in the UK, and with just five Mobile Network Operators (MNO’s) competing to win business from each of them. This competition allows customers to have lower prices and better services but unfortunately it also allows for mis-selling by unscrupulous mobile sellers.

Ofcom currently receive around 400 complaints per month, a significant number are related to mis-selling of mobile contracts by people claiming to be an MNO or acting on behalf of an MNO, known as ‘slamming’. These complaints have been taken directly to each of the MNO’s and together they have come up with a code of practice to try to stop this mis-selling by resellers.

The code covers, amongst others, the following areas:

Customer Contact

• All customer contact by telephone must be made at a reasonable time, between 8am and 9pm.
• Customers signed up to the Preference Services must have their wishes adhered to, and not contacted accordingly.
• Data used to contact prospective customers must have been gained in ways that comply with UK data protection laws.
• All automated calling equipment must comply with Ofcom’s policy on this matter.
• All calls must begin with the caller clearly introducing themselves and the company them work for, callers are no longer allowed to say they are ‘calling on behalf of a MNO’, i.e.: “Hello, my name is …………… and I am calling from [organisation], an authorised dealer for [network]”
• Callers must not abuse the trust of vulnerable customers – the elderly or those for who English is not their first language.
• Records must be kept for all sales and marketing, including recordings of all conversations kept for six months, date and time of call and details of the conversation.

Entering into a contract

Before a reseller accepts a customer order they must ensure that the customer knows they are being signed up to a contract, the key features of the contract and the names of the parties involved. Once the contract has been signed the customer must be provided with the following details:

• Minimum contracted period
• Minimum contract charges
• Any early termination charges
• The name and contact details of the reseller and MNO
• Any sales incentives (cashback details)
• Cancellation rights, including confirmation that the customer can change their mind and cancel without cost within a specified period.

Sales Incentives

If there is a sales incentive included in the offer the customer must be provided with a written statement of who is providing the offer, and a clear statement of the terms & conditions of that offer. Cashback offers are to be deemed unreasonable if they:

• Do not accept copies of bills / statements as proofs
• Charge for processing a cashback claim
• Give an unreasonably short time limit for accepting claims – anything under 60 days is unreasonable
• Will not accept bills / statements with an outstanding payment on the account

Compliance

MNO’s will need to regularly monitor resellers to ensure they are sticking to the code, and will ask anyone breaking the code to investigate the matter and provide an explanation within 10 days. If a reseller continues to breach the code the Mobile Operator will send a written warning detailing further action should the reseller continue to breach the code. In extreme cases a MNO can terminate the agreement with a reseller.

As this is a voluntary code there is no timescale for the code to be accepted by resellers, however, Ofcom may consider a formal intervention in the future should this code fail to reduce the number of customers being mis-sold.