A Review of Consumer Complaints Procedures

Statement published 22|07|10

Summary

Ofcom's approach to industry complaints handling

Ofcom's principal duty under the Communications Act 2003 ('the Act') is to further the interest of citizens in relation to communications matters and to further the interests of consumers in relevant markets, where appropriate by promoting competition. We also have a specific duty under the Act to secure, so far as is considered appropriate, 'that the procedures established and maintained for the handling of complaints and the resolution of disputes are easy to use, transparent and effective'.

To date we have imposed two regulatory obligations on communications providers regarding the handling of consumer complaints:

1. they must have a Complaints Code of Practice that is approved by Ofcom and with which they must comply (General Condition 14.4); and
   
2. they must belong to an Ofcom-approved Alternative Dispute Resolution (ADR) scheme and adhere to the final decisions made by that scheme (General Condition 14.5). The ADR schemes are independent bodies that can examine complaints that have not been resolved within eight weeks, at no cost to consumers.

Why do we have concerns with current industry standards?

Our evidence shows that a significant proportion of consumers have a very poor experience when pursuing a complaint with their provider:

• recent Ofcom research shows that 30% of complaints are still unresolved after 12 weeks (representing around 3 million consumer complaints each year);
  
• the majority of consumers who cannot resolve their complaint promptly have considerable difficulty getting their provider to recognise they are trying to make a complaint and in finding out information about the complaints process;
  
• those consumers who are unable to resolve their complaint within 12 weeks are much more likely to suffer financially or through stress;
  
• research shows ADR significantly improves outcomes for consumers, but awareness of ADR in the telecommunications sector is considerably lower than comparable schemes in other sectors, which we consider is undermining its effectiveness as a remedy of last-resort (only 8% of consumers are aware that they can take unresolved complaints to ADR, which is considerably lower than in a number of other sectors with similar schemes); and
• Ofcom continues to receive significant numbers of complaints each month from consumers who are unhappy with their provider's complaints handling process.

The evidence suggests that providers' incentives to compete on the basis of customer service are not proving sufficient to ensure that individuals will receive satisfactory treatment from their provider when they try to pursue a complaint.

What is Ofcom doing to improve how complaints are handled?

We recognise that many communications providers view customer service as a key component of their operations and will endeavour to treat their customers fairly. Our aim is to ensure that when something goes wrong consumers are able to find out easily how to make a complaint and can be assured their provider will have appropriate processes in place to receive and handle their complaint.

We published a consultation document in December 2009 outlining our position that changes were needed to existing regulation to better protect consumers and proposing several new obligations to address specific areas of concern. Most of the 27 submissions we received were broadly supportive of our proposals, albeit a number of communications providers expressed some concern, particularly about the implementation of proposed measures to increase awareness of ADR.

Ofcom is satisfied that the current standards of complaints handling in the telecommunications industry are of sufficient concern to justify regulatory intervention and is therefore:

1. establishing minimum standards for complaints handling procedures, which will apply to all communications providers ('the Ofcom Code'). The Ofcom Code establishes a regulatory requirement for providers to resolve complaints in a 'fair and timely manner' and also outlines minimum expectations about the accessibility, transparency and effectiveness of providers' complaints handling procedures. This will replace the current requirement for providers to seek Ofcom approval of their individual Codes of Practice; and
   
2. requiring communications providers to provide additional information to consumers about their right to take unresolved complaints to ADR, which has been shown to help resolve long-running complaints. Providers will now need to include relevant information about ADR on consumers' bills and to write to consumers whose complaints have not been resolved within eight weeks to inform them of their right to go to ADR.

The specific requirements are attached as Annex 1 and reflect a number of changes that we have made since the publication of our consultation document. We consider the measures we are taking to be an appropriate response to the problems we have identified with complaints handling in this sector and will help address what we consider to be significant and avoidable consumer detriment.

When will the new rules come into force?

The minimum standards for the handling of complaints will come into force on 22 January 2011, with the exception of the proposals to increase awareness of ADR, which will come into force on 22 July 2011.