Money News
Proposals for new rules to stamp out misleading sales and marketing practices in the mobile telco market have been announced by the communications watchdog Ofcom. This follows a warning last summer that unless the sector cleaned up its act, Ofcom would introduce mandatory rules. Despite this, Ofcom claims some mobile phone companies and third party sales agents are still engaging in unacceptable practices that are against the consumer interest.
It is particularly concerned about two practices:
1- Where customers are given false or inaccurate information when they want to buy a mobile contract.
2- Some "cash back promotions offered by sales agents where they fail to reimburse the consumer.
In July 2007 the five mobile phone operators signed up to a voluntary industry code. This defined a 'best practice' approach to marketing and selling mobile services, either directly or through third-party sales agents.
However, since July 2007, Ofcom says it has continued to receive a large number of consumer complaints about mobile mis-selling and cash back issues. Since the introduction of the industry code, it has received an average of around 700 complaints per month until January 2008, compared with 460 complaints in July 2007.
The new proposals, if adopted, will see the introduction of a General Condition. This is a legally enforceable rule that a communications provider must adhere to under the Communications Act 2003. The penalty for breaching a General Condition can be a fine of up to a maximum of 10% of relevant turnover.
The new General Condition will require mobile operators:
1- Not to engage in dishonest, misleading or deceptive conduct and to ensure that those selling their products and services similarly do not mis-sell.
2- To make sure the customer intends and is authorised to enter into a contract, as well as requiring consumers to get the information they need at the point of sale.
3- Ensure that the terms and conditions of cash back deals offered by their retailers are fair.
4- To carry out due diligence and a number of checks in respect of their retailers.
The consultation runs until April 29th 2008. Ofcom proposes to have the new rules in place by summer 2008.
19 March 2008 © Moneyextra.com
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