A Review of Consumer Complaints Procedures

Summary

Summary

Ofcom's approach to industry complaints handling

1.1 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, as appropriate, that the procedures established and maintained for the handling of complaints and the resolution of disputes are easy to use, transparent and effective'. ^(-1-)

1.2 To date we have exercised our duties through 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 14.7). 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?

1.3 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 making 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, less than half that in a number of other sectors with similar schemes); and
  
• Ofcom continues to receive nearly 1,000 complaints a month from consumers who are unhappy with their providers' complaints handling process.

1.4 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 proposing?

1.5 We recognise that many communications providers view customer service as a key component of their operations and will endeavour to treat their customers fairly. It is not the role of Ofcom to regulate customer service standards. Our aim instead 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.

1.6 We are proposing several initiatives to improve the existing regulation of complaints handling in the telecommunications industry:

1. establishing some basic high level standards for complaints handling. This will ensure the accessibility and transparency of providers' complaints handling procedures and require providers to have processes in place to secure the fair and timely resolution of complaints. This proposal will replace the current requirement for providers to seek Ofcom approval of their Codes of Practice; and
   
2. providing additional information to consumers to increase awareness of ADR, which has been shown to help resolve long-running complaints. Under our proposals, providers will need to include relevant information about ADR on all consumer 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.

1.7 We also signal our intention through this consultation to improve transparency of the relative performance of providers' complaints handling, which we believe could benefit both industry and consumers. We are seeking stakeholder views on the merits of publishing various measures of provider-specific performance.

1.8 Stakeholders have had an opportunity to express their views on some of these issues through our July 2008 consultation. Since that consultation we have refined our proposals in light of further market research and engagement with industry and consumer stakeholders. We consider the proposals we are setting out to be a proportionate response to the problems we have identified and address what we consider to be significant and avoidable consumer detriment.

1.9 We are inviting comments on our proposals by 12 March 2010.

Footnotes:

  1.- Section 52(3) Communications Act 2003.