After an Ofcom investigation that found BT didn’t give clear and simple information to customers who signed up to deal with its subsidiaries EE and Plusnet, BT has been told it must refund early exit fees and let existing affected customers walk away penalty-free.
What Happened?
Under new consumer protection rules, known as ‘General Conditions’ (GCs), that came into force in June 2022, phone and broadband companies, of which BT is both, must give consumers and small businesses the details of a contract, as well as a summary of its key terms, before they sign up. These details must include the price, the length of the contract, the speed of the service, and any early exit fees.
UK Telecoms regulator, Ofcom, says that it opened an investigation into BT after it received information that two of BT’s wholly-owned subsidiaries, EE and Plusnet, may not have been providing the required documents to some customers.
The Findings
Ofcom says its investigation revealed that since the introduction of the new rules on 17 June 2022, EE and Plusnet made more than 1.3 million sales without providing customers with the required contract summary and information documents. Ofcom found evidence that 1.1 million customers were affected by this between 26 June and 30 September 2023, i.e. they were not given contract information before they signed up as is required under the new rules.
Other key findings by Ofcom were that:
– Despite telling Ofcom in February 2022 that it was confident the deadline to meet the new rules would be met, evidence showed that BT knew as early as January 2022 that some of its sales channels would not meet the deadline.
– In some cases, BT deliberately chose not to comply with the rules on time.
– Ofcom says that whereas other providers dedicated the resources required to meet the implementation deadline for the new rules, BT may have saved costs by not doing so.
– Some sales channels are still non-compliant, and BT is still not providing the required information at the right time to some customers.
The Outcome
The outcome of Ofcom’s findings in this case are that:
– Ofcom has issued a £2.8 million fine to BT, although this includes a 30 per cent discount as a result of BT’s admission of liability and its completion of Ofcom’s settlement process.
– The 1.1 million customers affected have been given the opportunity to request the information and/or cancel their contract without charge.
– For those customers who left BT before the end of their contract and were charged an early exit fee, BT must refund those early exit fees, and let existing affected customers walk away penalty-free.
Other Action
Other actions that BT has been instructed to take by Ofcom in relation to this case include:
– Identifying and refunding any affected customers who may have been charged for leaving before the end of their contract period, within five months of Ofcom’s decision.
– Within three months, contacting the remaining affected customers who are still with BT and have not already been contacted, to offer them their contract information and/or the right to cancel their contract without charge.
– Amending remaining sales processes that are still non-compliant within three months of Ofcom’s decision.
Unacceptable
Ofcom’s Enforcement Director, Ian Strawhorne, said: “When we strengthened our rules to make it easier for consumers to compare deals, we gave providers a strict timeline by which to implement them. It’s unacceptable that BT couldn’t get its act together in time, and the company must now pay a penalty for its failings.”
Also, Rocio Concha, Director of Policy and Advocacy for consumer organisation ‘Which?’ said: “It’s absolutely right that Ofcom is fining BT for not providing EE and Plusnet customers with clear contract information before they signed up – as some people will have been hit with pricey exit fees they never should have faced.”
What Does BT Say?
BT has been reported as saying that it is sorry, will “implement the remedial actions” required by Ofcom and has “taken steps to proactively contact affected customers and arrange for them to receive the information and be refunded where applicable.”
What Does This Mean For Your Business?
Ofcom’s ruling against BT is a reminder to telecoms companies and service providers about the importance of compliance with the latest regulatory requirements. For BT, this incident highlights the critical need for transparency and accountability in customer communications, especially in a competitive market where trust is paramount. The £2.8 million fine (which some commentators say should have been higher) and the mandated refunds are examples of the financial and reputational risks associated with non-compliance.
For other providers, this case is a cautionary tale that emphasises the need to adhere to consumer protection rules and the potential consequences of failing to do so. It also shows that companies that decide to push boundaries in their marketing campaigns must think more carefully about these strategies, ensuring that their promotional activities do not leave customers in the dark about what they are signing up for. In an industry where bundling services into complex contracts is common, maintaining clarity and simplicity within customer interactions is still essential to avoid regulatory scrutiny and potential penalties.
For customers, this case may see them benefit (a little) from increased regulatory oversight and assurances that providers must comply with clear guidelines, thereby helping them make more informed decisions about their service contracts. Also, the knowledge that you can exit contracts without penalty in cases of non-compliance should be reassuring and help consumers from being unfairly trapped in agreements they did not fully understand.