Broadband ISP TalkTalk (Tiscali) UK has today been forced to repay £2.5 million worth of refunds and good-will payments after an investigation by Ofcom found that the provider had incorrectly billed 62,000 of their customers. The move follows a formal warning, which was issued to the ISP last November 2010 (here).

The communications regulator found that TalkTalk had breached telecoms rules (General Condition 11.1), such as by issuing bills for services that had not been provided (e.g. continuing to charge ex-users for cancelled products). In some cases debt collection agencies were even sent out to bully those who refused to pay, often in error (this can cause damage to a person's credit rating).

Many of the problems stemmed from Tiscali's poor history of administrative errors and billing mistakes, which TalkTalk effectively inherited during its earlier 2009 acquisition. Regular readers will recall that Tiscali was one of the most complained about ISPs on ISPreview.co.uk for several years running.

Ofcom's Legally-Binding November 2010 Notification Required TalkTalk (Tiscali) to..

* Provide refunds to all consumers who were billed for cancelled services since 1st January 2010;

* Stop debt collection action, and withdrawing from any legal proceedings (if started), against consumers and paying their reasonable legal costs; and

* Taking any necessary steps to repair credit ratings of affected consumers, such as notifying credit reference agencies where relevant.

Ofcom initially gave TalkTalk until 2nd December 2010 to make all necessary changes and comply with their rules. Failure to do so would have resulted in further enforcement action, such as a maximum fine worth up to 10% of the companies turnover. It was later agreed that TalkTalk would need more time to comply, hence today's somewhat delayed announcement.

Ofcom confirmed today that TalkTalk had finally taken "significant steps" to fix the problem and to comply with their regulations, thus they would not be fined. These steps included identifying and compensating some 62,000 affected consumers. However TalkTalk's problems continue.


It's also understood that the Government is currently consulting on changes to the existing laws, which would allow Ofcom to issue a financial penalty for breaches of the regulations, regardless of whether a company subsequently took action to address the problem. The new powers, if approved, would be available from 25th May 2011.

Such a change would mark a significant shift in Ofcom's ability to punish or threaten punishment against operators that frequently bend or break the current rules. Customers affected by such problems should also check out our ISP Complaints and Advice section for additional information on how best to proceed (e.g. using an ADR complaints handler scheme).

UPDATE 12:36pm

TalkTalk has sent us their official reply to today's news which, despite the on-going problems, welcomes Ofcom's recognition of their progress.