UPDATE Ofcom UK to Improve its Identification of Slamming and Mis-selling

A new report created by Mott MacDonald (MM) has advised Ofcom on how to improve its identification of mis-selling and slamming in the UK phone and broadband market. The research found several issues with the regulators tracking of such complaints and revealed some interesting details about the scale of related problems.

Mis-selling is the term most commonly used to describe a situation where consumers are wrongfully sold a service, which usually stems from the end-user being given either misleading or inaccurate information (e.g. told the service has no contract when in fact it comes with a 12 month one). Meanwhile slamming occurs when customers are switched from one ISP to another without their knowledge or consent.

The Ofcom commissioned report states that the regulators Consumer Contact Team (CCT) currently receives approximately 700 complaints a month about related problems, which the regulator then converts into a monthly metric on the ratio of mis-selling complaints to successful set-ups for the largest providers (e.g. BT, TalkTalk, Sky Broadband, Virgin Media etc.).

But some providers have questioned the validity of this metric and claim that it can result in Erroneous Line Transfers (ELTs) and cases of Buyer’s Remorse, which are often factors beyond the ISPs control, being identified as mis-selling. Similarly many mis-selling complaints involve sales to existing customers rather than new set-ups (only sales to new customers technically breach Ofcom’s related GC24 rule).

As a result Ofcom asked Mott MacDonald to conduct a detailed analysis of one month’s mis-selling data (584 complaints), which produced some interesting data and concluded that the CCT method was “accurate at an aggregate level“. But 14% of cases appeared to get the complaints sub-category wrong and 41% of cases revealed inaccuracies in the identification of whether the complaint concerned a new or existing customer.

The result of all this was a difference in the categorisations made by CCT and MM. In short, CCT found that slamming and mis-selling accounted for 86% of cases, with 43% involving new customers (14% of cases were ELTs). By comparison MM found slamming and mis-selling in 80% of cases, with 62% to new customers (18% of cases were ELTs).

But MM noted that its above conclusions were only based on 68% of the data provided by CPs, which is because the remaining data (32%) was considered insufficient to aid analysis. As a result MM proposed that, in the absence of adequate response or justification from the CP, Ofcom should consider the consumer’s complaint as valid. When this was factored it revealed that mis-selling and slamming accounted for 53% of cases, with 40% involving new customers (27% of cases were ELTs).

An Ofcom Spokeswoman told ISPreview.co.uk:

“At Ofcom’s request, Mott Macdonald (MM) has made a series of recommendations for improving data accuracy. Overall, the study concluded that our data gives an accurate reflection of the sales complaints made by consumers. This means we can have high level of confidence in our reporting of sales related issues and therefore our work in protecting consumers in this area.

The discrepancies identified by MM primarily related to the more granular level of the complaint and not the validity of the sales complaint itself. Also, some of the differences between CCT data and MM assessment are likely to stem from the new information revealed once the data from CPs was taken into consideration – this is always likely to be the case.

We have created a dedicated working group to consider some of the report’s recommendations in further detail which will make our complaints data even more accurate in the future.”

In conclusion, MM suggested several ways in which Ofcom could improve how it identified valid mis-selling and slamming complaints, which should make future reports more accurate. We’d also like to see more of this data being released to the public, including the specific naming and shaming of any related ISPs; as opposed to only naming the provider when the problem gets series enough to warrant a public investigation (e.g. the 2011 investigation of TalkTalk).

As an entertaining aside, MM also suggested that ISPs should “avoid sending information which cannot be cross referenced to the case in question, or data which cannot be intuitively understood – i.e. containing obscure acronyms or CP reference codes.” Good luck with that :).

UPDATE 10th November 2012

Added a comment from Ofcom and amended the article above to reflect its content.