Ofcom fines Unicom for misleading customers

30 Jul 2015 02:31 PM

Package of measures brought against small business telecoms provider

Ofcom has yesterday fined Universal Utilities Ltd, trading as Unicom, £200,000 for mis-selling landline telephone services.

The decision also requires Unicom to take a number of steps to help compensate customers affected by the mis-selling and to guard against it happening again.

Ofcom launched the investigation into Unicom, which provides telephone and broadband services to around 100,000 small businesses, after receiving complaints from customers and having assessed evidence submitted by Unicom in the course of initial enquiries.

The investigation into Unicom is part of Ofcom’s wider monitoring and enforcement programme into the sales and marketing activities of communications providers.

Under Ofcom rules, communications providers must give prospective customers accurate information about the services they are providing.

Ofcom’s investigation found that, over the period investigated - from 1 March 2013 to 8 July 2014 - Unicom used sales processes that gave some prospective business customers a misleading impression about costs they could face.

Specifically, this related to Unicom giving a misleading impression about the payment of early termination charges if the prospective customer chose to leave their existing communications provider.

Over the same period, Unicom’s sales processes also misled some prospective business customers that transferring their landline telephone service to Unicom would not affect their existing broadband services.

As a result, Unicom has been found in breach of Ofcom rules, which state that providers must not engage in misleading conduct.

Ensuring compliance

Ofcom has imposed a fine of £200,000 against Unicom and outlined steps the company must now take. These include:

• Compensating any customers who were misled in the relevant ways during the period investigated;
• Allowing those customers to exit their contract with Unicom penalty-free;
• Covering the cost of any reconnection charges for those customers where they choose to return to their previous provider;
• Making all necessary changes to its policies, procedures and marketing and sales materials to ensure it complies with the rules; and
• Providing appropriate training to sales staff, and introducing a system to monitor the conduct and compliance of Unicom agents.

Claudio Pollack, Ofcom’s Consumer and Content Group Director, said: “Small businesses in the UK increasingly rely on high-quality communications services.

“Service interruptions and unexpected costs can cause a real concern for these customers. Ofcom does not accept misleading practices and we will take action against companies that break the rules.”

The £200,000 fine is payable to Ofcom and then passed on to HM Treasury. Unicom must pay it within 20 working days of receiving Ofcom’s decision.

Wider protection for SMEs

Last month Ofcom announced an agreement from three of the UK's largest suppliers - BT, TalkTalk and Virgin Media, which account for the majority of business broadband users - to work on a new Code of Practice for business broadband services.

The Code for business broadband, which Ofcom aims to publish in the autumn, is expected to set commitments for providers to give accurate estimates of the actual speeds that business customers will receive.

Last year, Ofcom also launched a dedicated online portal with advice for businesses on choosing and switching provider, navigating and negotiating contracts, and resolving complaints.

NOTES FOR EDITORS

1. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications, wireless communications and postal services.
2. The regulatory rules that applied during the period of the investigation into Unicom were in General Condition 24.3 of Ofcom’s General Conditions of Entitlement. General Condition 24.3(a) required that, when selling landline telephone services Communications Providers must not engage in misleading conduct (or dishonest or deceptive conduct). From September 2014 the same rule is in General Condition 22.3. It also applies to broadband services.
3. For further information about Ofcom please visit: www.ofcom.org.uk. Ofcom’s news releases can be found at: