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Ofcom UK Set Final Fairness Framework to Tackle Unfair Practices

Thursday, January 23rd, 2020 (11:39 am) - Score 764

Ofcom has published their final Fairness Framework (guidelines) for UK providers of mobile, home phone, pay TV and fixed broadband ISPs, which have been designed to show consumers how the regulator will in future assess whether such providers, and the way they treat their customers, is fair (pricing, transparency, support etc.).

At present the UK regulator has already succeeded in getting various providers to sign-up to their “Fairness for Customers” commitment(s). As a result of that and other activity, several big operators have already agreed to make key changes (see here), not least in order to protect “vulnerable” consumers (e.g. pensioners) from “loyalty penalties” (i.e. references how loyal customers – those who don’t switch providers or renegotiate at the end of a contract – often end up paying more than new ones). The new End-of-Contract Notifications (ECN) system, which will be introduced next month, is another supportive change.

The new Fairness Framework (PDF) is thus centred on how Ofcom will actually assess “fairness” in the regulatory sense, such as in terms of identifying and then “stamping out unfair and harmful practices.” Arguably this might seem like something that they’ve already been doing on many different occasions via their past rulings, but they’ve never underlined this before with a clear framework.

For example, when the regulator is assessing concerns about fairness then they will now consider the following questions:

fairness framework questions 2020

The framework also highlights the type of company practices that Ofcom is most likely to see as unfair, and which may lead to regulatory action. One example is companies attempting to mislead their customers or take advantage of those who may be less able to choose the best deal for their needs (e.g. vulnerable consumers, like pensioners)

The Framework also sets out the kinds of issues the regulator will examine when they assess whether a company is treating its customers fairly. These include the importance of the service in question; the degree of potential harm; and which customers are affected.

What Ofcom Has Decided

Our fairness framework sets out the types of questions and factors we would be likely to consider in assessing whether customers are being treated fairly.

Our duties are underpinned by securing fair outcomes for customers and we take action where necessary to protect people from harmful practices. We set out our likely approach to assessing whether provider practices and the outcomes they generate are unfair, and whether we should intervene to protect customers.

Our fairness framework extends to all aspects of the customer experience, including prices.

It is not always immediately clear if a provider’s pricing practices are fair or unfair. This can be the case with price discrimination, where different customers pay different prices for the same service. We may welcome this practice where it involves applying discounts to the prices paid by certain groups of customers, such as those on low incomes; or where it promotes switching, thus encouraging healthy competition. But we may be more concerned where different prices are not applied transparently, where behavioural biases are exploited or where price discrimination adversely affects vulnerable customers. We think there are benefits in having an explicit framework for assessing these concerns. However, pricing is not the only aspect of the customer experience where issues of fairness arise and where guidance on our likely approach would be beneficial.

The framework provides us with a tool to assess fairness concerns in the round.

We expect to use our fairness framework to assess individual practices and whether they might be considered unfair, on a case-by-case basis. In deciding whether to take formal action against practices we consider are unfair to customers, we will continue to apply our existing regulatory principles and act in line with our statutory duties.

Ofcom said they intend to publish a report to monitor the progress of providers against the commitments they’ve previously made in the autumn of 2020.

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1 Response
  1. Avatar Beth

    Good, look out TalkTalk you are an absolute disgrace the way you treat your customers, consumer harm at its very worst!

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