The UK telecoms, internet and media regulator, Ofcom, has today hit broadband ISP BT (including subsidiaries EE and Plusnet) with a fine of £2.8 million, which occurred after their investigation found the operator had “failed to provide” more than a million customers with clear and simple contract information before signing up to a new deal.
The investigation, which began in January 2023 (here), actually represented somewhat of a merger and continuation of the investigation that Ofcom originally launched into EE during October 2022 (here), which focused upon the exact same issue. During the course of that probe, Ofcom received new information, which gave them “reason to suspect that Plusnet – another BT subsidiary – may also have failed to comply” with their rules.
The situation concerns the new consumer protection measures that Ofcom introduced on 17th June 2022 (here). The relevant change (General Conditions C1.3 to C1.7 and C5.16) is the one that requires broadband and mobile operators to provide customers with a short, one-page summary of the main contract terms before entering a contract, including clear examples of how any price increases might impact the price they pay.
The change was designed to help people avoid being caught out by surprise price rises, which was particularly important because it occurred at a time when household budgets were under heavy strain (this remains the case today). The summary was also designed to include key information about the broadband speed of the service, price, and length of the contract. In addition, it further required firms to set out the terms and conditions if a customer decided to end their contract early.
The Outcome
In short, Ofcom has concluded that BT’s siblings had failed to provide these documents to some customers. The regulator found that, since 17th June 2022, EE and Plusnet had made more than 1.3 million sales without providing customers with the required contract summary and information documents. The evidence shows there were at least 1.1 million customers affected by this (this is less than the 1.3m because some customers purchased more than one service affected by the failure). This is despite BT telling Ofcom, in February 2022, “that it was confident the deadline would be met.”
Ofcom’s Summary
Evidence we have gathered shows that BT was aware from 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. Other providers dedicated the resource required to meet the implementation deadline for these new rules, and BT is likely to have saved costs by not doing so.
Following engagement with Ofcom, BT contacted 1.1 million customers – the majority of those affected – between 26 June and 30 September 2023, explaining that it had not provided them with the information to which they were entitled. Those customers have been given the opportunity to request the information and/or cancel their contract without charge.
However, before these communications were sent, some customers left BT before the end of their contract and may have been charged an early exit fee. Our rules are clear that if the required contract summary and contract information is not given, the contract is not binding on customers. As a result, an early exit fee should not have been payable by these customers.
Also, some sales channels are still non-compliant and BT is still not providing the required information at the right time to some customers.
As a result of these failings, Ofcom has today decided to fine BT £2,800,000 to reflect the “seriousness of this breach.” As well as fining BT, Ofcom are also requiring them to identify and refund any affected customers who may have been charged for leaving before the end of their contract period, within 5 months of this decision.
On top of that, BT has been given 3 months to contact the remaining affected customers who are still with the operator and have not already been contacted, to offer them their contract information and/or the right to cancel their contract without charge. Finally, BT has been told to amend the remaining sales processes that are still non-compliant to ensure that all customers receive the right information at the right time, in most cases within three months of this decision.
Ian Strawhorne, Ofcom Enforcement Director, said:
“For people to take advantage of the competitive telecoms market here in the UK, they must be able to shop around with confidence.
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.
We won’t hesitate to step in on behalf of phone and broadband customers when our rules to protect them are broken.”
At the time of writing we don’t yet have BT’s official response to this, but Ofcom does note that BT has made an “admission of liability and agreement to settle the case”, which has resulted in a 30% reduction in their fine. The operator now has four weeks to pay the fine, which will then be passed on to HM Treasury.