Posted by Julia Roxan on 5 September 2017

Broadband customers are at risk of being short-changed out of £52m in compensation

Citizens Advice is calling on the telecoms regulator Ofcom to keep its proposed automatic compensation scheme mandatory

People with broadband and landline telephone service problems are likely to be at least £52 million worse off under a compensation scheme proposed by telecoms firms compared to one proposed by the regulator Ofcom, new analysis from Citizens Advice finds.

Broadband and landline consumers are already particularly unlikely to get compensation when they receive a poor service. Research by Citizens Advice on complaints finds that currently only one in six of consumers who complain to their telecoms providers receive any kind of financial compensation. By contrast twice as many (one in three) consumers who had complained about other essential regulated services - such as energy and water - received financial compensation.

In March, Ofcom began consulting on automatically compensating consumers for quality of service problems.

The regulator proposed mandatory payments for consumers in cases where they experienced a delay to repairs following a loss of service, delays to getting a broadband service installed beyond the date the provider committed to, and missed appointments or those cancelled with less than 24 hours’ notice. This would be similar to automatic compensation schemes in the energy and water industries, with the compensation usually paid through rebates on people’s bills.

Responding to Ofcom’s consultation, three of the UK’s biggest broadband providers, (BT, Virgin Media and Sky), jointly proposed a voluntary scheme in which providers should be able to decide the circumstances in which consumers get compensation and how much.  The voluntary minimum payment proposed by the providers was up to £10 less for a missed appointment than the minimum proposed by Ofcom.

The difference between the Ofcom and the industry schemes for each type of compensation are:

 

Loss of service

Delayed installation

Missed appointment

Proposed industry payment (June 2017)

£7 per calendar day for loss of service beyond two working days

£4 per calendar day (only payable automatically if customer subsequently activates)

£20 for a missed
appointment slot or cancellation with less than 24 hours

Ofcom payment

£10 per calendar day beyond two working days after the provider becomes
aware of the loss

£6 per calendar day beyond the date that the provider has committed to in a written form

£30 for a missed
or cancellation with less than 24 hours

Citizens Advice has calculated that consumers with broadband problems would lose out by at least £52m in total under the industry scheme - a 32% reduction compared to Ofcom’s proposal.

Gillian Guy, chief executive of Citizens Advice, said:

“A watered-down compensation scheme would short-change customers by millions of pounds.

“Thousands of people each year seek our help when their provider fails to repair or set up their broadband. Some people are left without a working internet connection for weeks despite numerous calls to their provider or no-shows from engineers. Broadband is now an essential service, with households relying on it for everyday activities, so a lack of a working service can make day to day tasks much more difficult.

“Ofcom was right to propose a mandatory scheme to automatically compensate customers when they get a poor service from their provider, this should put an end to consumers having to negotiate with their provider to get the compensation they deserve.

“The regulator must hold its ground and introduce a compulsory automatic compensation scheme that clearly lays out how much consumers are entitled to when they get poor service, with the amount providers have to pay reflecting as closely as possible the detriment faced by consumers.”

Previous research from Citizens Advice found the time people spend resolving telephone, TV and internet problems costs them as much as £1.5 billion a year - more than with any other product or service. This includes £874 million in earnings people lost whilst trying to get their problem resolved.