Voda stung with £4.6m for consumer protection failures

Voda stung with £4.6m for consumer protection failures

Vodafone has been fined £4,625,000 by Ofcom following ‘serious and sustained breaches of consumer protection rules.’

The verdict stems from two now concluded investigations into the network’s complaints procedures and pay-as-you-go billing, both of which opened in June 2015.

On pay as you go billing, Ofcom found that 10,452 pay-as-you-go customers lost out when Vodafone failed to credit their accounts after they paid to ‘top-up’ their mobile phone credit. The affected customers collectively lost £150,000 over a 17-month period.

These issues arose from Vodafone implementing a new billing system, with the errors occurring when accounts were transferred across. However, Vodafone failed to stop the faulty payments before Ofcom were forced to intervene.

For this error, Vodafone were fined £3,700,000.

On complaints handling, Vodafone failed to guide its customer service agents on what constituted a complaint and the regulator found they’re to be insufficient systems in place to escalate or deal with complaints in a timely manner. The operator also failed to inform customers of their right to involve a third party in resolving the issue after eight weeks. For this error, Vodafone were fined a further £925,000.

While the total fine is enough to draw attention to the company’s failings, it falls far short of the 10% of revenue that Ofcom is entitled to fine them for failings such as this.


The reaction


Responding to outcome of both investigations, Vodafone issued a statement accepting the outcome and apologising to those affected staing ‘We deeply regret these system and process failures. We are completely focused on serving our customers: everyone who works for us is expected to do their utmost to meet our customers’ needs, day after day, and act quickly and efficiently if something goes wrong. It is clear from Ofcom’s findings that we did not do that often enough or well enough on a number of occasions. We offer our profound apologies to anyone affected by these errors.’

The company went on to describe what steps have been taken to fix these issues, stating that 10,422 Pay-g customers were refunded or recredited, an Ofcom acknowledged complaints procedure was introduced and hiring 1,000 extra UK call centre staff.

Concluding, Vodafone stated ‘This has been an unhappy episode for all of us at Vodafone: we know we let our customers down. We are determined to put everything right. We are also confident that our customers are already beginning to see the benefits of our substantial investment in new systems.’


The industry

Mobile comparison site uSwitch.com believe the incident underlines a confusing complaints procedure for the mobile industry, with the brand’s head of regulation and compliance, Richard Neudegg stating ‘However, the telecoms market’s complaints procedure is more confusing than other regulated sectors. There isn’t one single Ombudsman - there are two that companies may direct customers to. So it’s extremely important that information on how to access these is completely clear.’

Also commenting on the wider ramifications of the judgement, cable.co.uk’s editor-in-chief Dan Howdle suggests that the other networks shouldn’t be enjoying their rival’s bad press, stating, ‘While the investigation shines light on inadequate remedial systems within Vodafone, it would be foolish to assume it is alone in its inadequacies. The message is clear to all: Fines of this size are the shape of things to come, and preventative measures should be taken, or suffer the consequences.’

Both oppositely and coincidentally, call outsourcing specialists Echo Managed Services today released a report heralding the mobile industry as the best sector for customer satisfaction in mobile billing, scoring over 7.5 out of 10.


The markets

with the length of the investigation, quarterly telling offs from Ofcom for getting the most complaints per thousand customers and billing issues being widely publicised earlier this year, shareholders didn’t show too much surprise in today’s announcement, with the Vodafone Group dropping a mere two points, perhaps reasoning that previous customer service issues haven’t had too much of an impact on churn, or customer numbers over the past two years.

David Cheetham, market analyst at XTB.com described why the news may not leave much of an impact in the City, ‘With the matter now put to bed, investors will hope that the firm can move on and look to build on a solid if not spectacular year so far which has seen the stock rise around 10%. Given the external headwinds such as this investigation and the EU referendum shock, this performance may be viewed as relatively favourable and the telecommunications company will likely be pleased to have drawn a line under the whole incident and take their medicine in the form of a sizeable fine which incidentally, is the single largest to have ever been issued by the telecoms regulator.’


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