Ofcom to regulate on cashback and misselling


But T-Mobile and Orange both said such intervention was unnecessary as networks had already taken necessary measures to monitor cashback and misselling.

If adopted, Ofcom’s proposals will see the introduction of a legally enforceable ‘General Condition’ that communications providers must adhere to under the Communications Act 2003.

Networks would be required to ensure customers are fully informed of any contracts they are entering, to ensure cashback terms and conditions offered by retailers are fair, and to carry out checks on retailers. They face a fine of up to 10 per cent of their turnover if they breach the condition.

Ofcom will accept feedback on the proposals until April 29. The new rules are set to be in place by the summer.

The proposal follows the introduction of a voluntary industry code in July last year, which was signed by all five networks.

But since the introduction of the code, Ofcom has received about 700 complaints a month until January, compared with 460 complaints leading up to July last year, prompting the regulator to conduct an industry review.

Ofcom chief executive Ed Richards said: “Strong competition in the UK market place is no excuse for marketing malpractice.

“We warned the industry last year that unless it cleaned up its act we would consider introducing new rules.

“The facts show this hasn’t happened, so we are now proposing tougher measures to protect consumers from unacceptable sales and marketing practices.”

The Independent Mobile Phone Dealers Association (IMPDA) has welcomed the proposals, but chairman Chris Caudle said he was still waiting for a response from the networks in regards to a meeting with independent dealers to further discuss the matter of cashback.

The networks all said they would support Ofcom’s proposals. However, T-Mobile and Orange said intervention by the regulator was unnecessary.

A T-Mobile spokesperson said: “T-Mobile does not believe formal regulation is the answer.

“The steps the company is taking to ensure dealers comply with the guidelines are having the desired affect.”

A spokesperson from Orange added: “We feel that formal and costly regulation is unnecessary as misselling is an issue that Orange, and the rest of the industry, is committed to addressing with robust action already being taken.”

O2 said Ofcom should balance being “tough on offenders” without being “burdensome” on responsible traders.