Charter UK Seek FSA Style ISP Regulation to Stop Mid Contract Price Hikes

The boss of complaints management firm Charter UK has praised the telecoms regulator, Ofcom, for moving to tackle internet and phone providers that impose unexpected price hikes during a contract; but he also told the regulator that it needed to “investigate how this has been allowed to happen in the first place” and change its approach to be more like the Financial Services Authority (FSA).

Ofcom intends to ensure that ISPs are more “transparent” about the potential for price increases and will also make it easier for consumers to cancel their contract without penalty, although it refused to ban the practice as that would go against EU law.

Sadly the changes themselves will not be ready until June 2013 and related measures probably won’t be enforced until even later in the year.

Paul Clark, CEO of Charter UK, told ISPreview.co.uk:

“Telecoms is not as tightly regulated as many other industries. In financial services, for example, the FSA expects businesses to demonstrate fairness to its customers through its Treating Customers Fairly (TCF) initiative. Even though the financial services industry clearly has its own scandals to deal with, it is taking steps to address its problems.

The telecoms industry should take note and consider what lessons can be learnt from this positive approach.”

The FSA’s TCF initiative requires financial firms to demonstrate that they are “consistently delivering fair outcomes to consumers” and that “senior management are taking responsibility” for ensuring that the firm and staff at all levels “deliver the consumer outcomes” relevant to their business. Clark similarly suggests that UK telecoms firms “need to take much greater ownership of the problem“.

It sounds like a good idea in principal, although broadband and phone services are a technically complicated solution to deliver and fundamentally very different from financial services. Indeed Ofcom already expects ISPs, through various different rules and principals, to behave in a similar way to the TCF and thus directly adapting the TCF to suit might not be the best approach.