Investigation into BT’s reported instances of apparent mis-selling of fixed-line telecoms services

Ofcom introduction

Background to the study and Schema’s report

1. Ofcom is charged with ensuring there is an appropriate balance between the protection of customers from mis-selling of services, and the ability of telecoms service providers to sell to customers without excessive restrictions.
2. There has recently been concern regarding this balance, owing to the volume and nature of apparent instances of mis-selling reported by BT Retail. These reports, referred to by BT as “Unfair Trading Incidents” (UTIs), are raised by BT Retail when it believes there has been a problem with the process of transferring a customer to another service provider, or “gaining provider” (GP). This is often triggered by a customer ringing to request cancellation. Data published and publicised by BT Retail splits UTIs into two categories: “apparent mis-selling” and “apparent inappropriate transfers”. Over 90% of the UTI incidents reported by BT Retail are claimed to be cases of apparent mis-selling by other service providers.
3. Therefore, in September 2004, Ofcom commissioned Schema Associates Ltd to examine and understand to what extent the UTI data published by BT Retail represents a true reflection of the level of mis-selling taking place. Objectives were as follows:

• To examine the framework currently used by BT to classify UTIs;
• To examine a representative sample of UTI data and establish which cases should be classed as mis-selling as opposed to some other form of transaction; and
• To develop an alternative framework that could be used in future to judge objectively the mis-selling of services.

1. Schema delivered their final report to Ofcom in the week beginning 20 December 2004. At the request of Ofcom, and so that Ofcom could fully understand the implications of the research as it applied to individual companies, Schema’s report contained information the companies that provided it regarded as commercially confidential, e.g. the identity of companies against whom allegations of mis-selling had been made. Therefore, this report was not published by Ofcom.
2. However, Ofcom considers that the general conclusions of Schema’s report should be made publicly available in order to assist with debate on the related issues. Ofcom is publishing this non-confidential version of Schema’s report. The only changes that Ofcom has made to the report are:

• Removing commercially confidential information;
• Focusing on the findings of the research;
• Editing the document so that it complies with Ofcom’s house-style; and
• Updating cross-references to account for changes made above.

1. Ofcom would also note that the research and analysis carried out by Schema has already fed into Ofcom’s work and decisions, such as:

• The Direction concerning BT’s use of Cancel Other and Determination to resolve a dispute between BT and various communications providers concerning BT’s use of Cancel Other, published 21 January 2005, (http://www.ofcom.org.uk/consult/condocs/cancel-other/codir/);
• The document Protecting citizens and consumers from mis-selling of fixed-line telecommunications services, published 13 April 2005; and
• Discussions with industry generally and individual companies on improvements to their sales and marketing activities, as necessary.

The full document is available below