5/29/2008 10:38:00 AM
Operators could drop dealers after Ofcom clampdown
Vodafone and 3 have warned that they may be forced to cut the number of dealers and disties they connect through if Ofcom’s proposed tough new rules on cashback and mis-selling are introduced.
Under Ofcom’s plans, networks could be fined up to 10% of their turnover if
re-sellers are found to mis-sell their products or offer dodgy cashback deals.
3 has voiced concerns that Ofcom’s decision to make networks responsible for third-party re-sellers could force the operator to reduce the number of dealers and distributors it deals with.
3’s director of indirect sales, Bernie O’Beirne, said: ‘The proposed Ofcom condition has good intentions, but we fear the regulatory burden will force us to make some tough choices about the scale of the businesses we trade with.
‘If the risk lies solely with operators, then smaller dealers, especially ones that trade intermittently, are likely to become unviable. The unintended result of Ofcom’s condition could send many dealers to the wall.’
In its written response to Ofcom’s plans, Vodafone expressed similar concerns and said: ‘The costs of monitoring entailed in GC23 [Ofcom’s plans] could exceed potential business benefit.’
Orange has distanced itself from comments made by the other operators, and has reassured its independent dealers that it will not desert them if Ofcom’s operator-focused guidelines on mis-selling and cashback are ratified.
Orange’s head of government policy and regulation, Simon Grossman, said: ‘We don’t share the view – that’s an overstatement. We don’t think it’s going to be too expensive to deal with the independent sector.’
Grossman conceded that, although the code would mean more work for the operator and that some of the responsibility would be passed on to distribution partners, it was not a cause for alarm.
He said: ‘We’ve been working hard to put our house in order regarding cashback and mis-selling. We don’t think it’s going to require a step change, but it will mean more paperwork.’
Meanwhile, T-Mobile said it would aim to protect consumer interests by working with the independent sector rather than shunning it.