Ofcom UK Take on Regulation of Premium Rate Phone Services

The UK telecoms, internet and media regulator, Ofcom, has today launched a new consultation on a proposed rule change that would see responsibility for day-to-day regulation of Premium Rate Services (PRS) being effectively transferred from the Phone-Paid Services Authority (PSA) to Ofcom.

Consumers can access a range of interactive services via their landline and mobile phones, as well as via computers and digital TV. Where these services are charged for via the customer’s telephone bill, they are known as phone-paid services or premium rate services (e.g. charity donations by text, music streaming, broadcast competitions, directory enquiries, voting on TV talent shows and in-app purchases).

The PSA is currently the designated day-to-day regulator for the PRS market (this derives from Ofcom having exercised its statutory powers to give the PSA that role), while Ofcom itself only provides a legal “backstop” function through enforcement of the PRS Condition. But today’s consultation, once carried forward, would see general regulatory responsibility for PRS transfer back to Ofcom.

The PSA is said by Ofcom to have been an “effective regulator for the PRS market for many years” and has helped to significantly reduce complaints. But the market is also undergoing some big changes, with legacy services – often provided via smaller companies – in decline and the rapid growth of PRS provided by global tech platforms (Apple, ITV, Sony and Google etc.) and a more compliant market.

In short, bigger fish need to be managed by a bigger regulator. Ofcom has greater powers and resources to deliver the PRS regulatory regime in the context of such a rapidly changing market, and so ensure regulatory certainty and confidence.

Ofcom’s plan is to thus retain the key principles and outcomes of the current regulatory framework, which would preserve existing consumer protection standards (i.e. transparency, fairness, customer care, vulnerable consumers and prevention of harm and offence), as well as organisational standards / requirements and various other responsibilities. But they also intend to add a few things.

Ofcom’s Statement

We are however proposing some new requirements – including new protections for consumers against harms associated with Information, Connection & Signposting Services. Additionally, we intend to streamline some of the existing requirements and ensure greater consistency with Ofcom’s broader regulatory regime.

We are also proposing to introduce transitional arrangements to ensure that the PRS market continues to operate effectively until the transfer date, and to make sure there are no gaps in regulation.

The consultation is set to run until 23rd January 2024, and, subject to responses, Ofcom expects to make the PRS Order (as well as to publish their final statement) in or during Spring 2024. The goal would then be to bring the PRS Order into force on 1st October 2024, giving PRS providers at least three months to prepare.