Own-initiative investigation into Universal Utilities t/a Unicom ("Unicom") in respect of compliance with General Condition 24

CW/01125/02/14

Title: Own-initiative investigation into Universal Utilities t/a Unicom ("Unicom") in respect of compliance with General Condition 24 - Sales and marketing of fixed-line telecommunications services and General Condition 9 - Requirement to offer contracts with minimum terms.
Complainant: Ofcom own-initiative investigation following complaints from consumers as well as an assessment of evidence submitted in the course of an own-initiative enquiry
Investigation against: Universal Utilities (trading as Unicom)
Case opened: 24 March 2014
Case closed: 29 July 2015
Issue: Whether Unicom has complied with its obligations under General Condition 24 and General Condition 9
Relevant Instrument: General Condition 24 (specifically 24.3 and 24.6) and General Condition 9 (specifically 9.3 and 9.4).

Update note: 27 October 2015

A non-confidential version of the Confirmation Decision issued to Universal Utilities Ltd (trading as Unicom) on 29 July 2015 has now been prepared and can be found under the related items.

End of update note

Ofcom issued Universal Utilities Ltd (trading as Unicom) with a notification under section 96A of the Communications (“the Act”) on 30 April 2015. This followed an investigation and a determination that we had reasonable grounds to believe Unicom had contravened GC24.3(a) as set out in the 6 May 2015 update below.

Unicom provided written representations to Ofcom on 5 June 2015 and made oral representations on 19 June 2015, in relation to the matters set out in the section 96A notification. Having considered those representations - and all the relevant evidence - Ofcom is satisfied that, between 1 March 2013 and 8 July 2014 (the Relevant Period), Unicom contravened GC24.3(a). It did so by providing mis-leading information to some prospective customers that, on transferring their fixed voice services to Unicom:

a) they would not incur Early Termination Charges (“ETCs”) or costs related to the early termination of contracts with their existing Communications Provider (“CP”) where they were still within the minimum contract period (“MCP”) of that contract; and
b) they would experience no effect on their existing broadband services.
Ofcom therefore issued Unicom with a Confirmation Decision under section 96C of the Act on 29 July 2015. The Confirmation Decision confirms the imposition of a penalty on Unicom of £200,000 in respect of its contravention. It also confirms steps that Unicom must take to comply with the requirements of GC24.3(a) and to remedy the consequences arising from its contravention.

In particular, to the extent it has not already done so, the steps which Ofcom confirms must be taken by Unicom to comply with the requirements of GC24.3(a) are:

a) making all necessary changes to its policies, procedures, marketing materials and sales scripts and/or guidance to sales staff;
b) providing appropriate further training to sales staff; and
c) implementing an effective quality assurance process to monitor compliance by Unicom’s agents with the requirements of the relevant GCs.

As to the steps Ofcom confirms must be taken by Unicom to remedy the consequences arising from its contravention of GC24.3(a), to the extent it has not already done so it must establish and effectively implement schemes for:

a) paying to all affected customers it is able to identify amounts by way of compensation for loss or damage suffered by them or in respect of annoyance, inconvenience or anxiety to which they have been put and/or by way of ex gratia payments;
b) allowing any customers who were misled by Unicom to cease their contract with it, regardless of the length of contract served, with no requirement to pay an ETC or disconnection fee and no requirement to pay any charges for services other than those the customer has used (and where the customer chooses to return to their previous Communications Provider (“CP”), this would include compensation for any charges the customer may incur in the process of returning to that provider); and
c) compensating customers who may otherwise have fallen into the above category but who have already returned to their previous CP and have incurred charges in doing so.
Ofcom will now monitor Unicom to ensure that the steps outlined in the section 96C Confirmation Decision lead to full compliance with GC24.3(a) and that the appropriate remedial steps are taken.

The scope of the Investigation was revised during its course as new information became available. In particular, Ofcom discontinued the investigation of possible contraventions of GC9.3, GC9.4 and GC24.6 following our analysis of information obtained from Unicom. Ofcom makes no findings in these regards.

A non-confidential version of the Confirmation Decision is currently being prepared and will be published shortly.

End of update note

Update note: 6 May 2015

Following an investigation, Ofcom has determined that there are reasonable grounds for believing that Universal Utilities Ltd (trading as Unicom) has contravened GC24.3 of the General Conditions between 1 March 2013 and 8 July 2014. Ofcom has therefore issued a Notification to Unicom under section 96A of the Communications Act 2003. Specifically, Ofcom has reasonable grounds to believe that Unicom operated standard sales and marketing processes under which it provided prospective customers with mis-leading information about its fixed-line telecommunications services.

The scope of the Investigation was revised during its course as new information became available. In particular, Ofcom discontinued the investigation of possible contraventions of GC9.3, GC9.4 and GC24.6 following our analysis of information obtained from Unicom. Ofcom makes no findings in these regards.

Unicom now has an opportunity to make representations to Ofcom on the matters contained in the Notification before Ofcom makes a final decision in accordance with section 96C of the Act.

End of update note

Ofcom has opened this investigation following complaints from consumers as well as an assessment of evidence submitted by Unicom in the course of an own-initiative enquiry.

General Condition 24 (GC24) places various obligations on fixed-line communications providers (CPs) regarding the ways in which they engage in sales and marketing activity.

General Condition 9 (GC9) places various requirements on CPs in respect of the provision of information, the length of contracts and the conditions for termination.

Ofcom's investigation will examine whether there are reasonable grounds for believing that Unicom has failed to comply with these obligations.

Case Leader: Jonathan Ruff (email:jonathan.ruff@ofcom.org.uk)
Case Reference: CW/01125/02/14