Ofcom fines Unicom £200,000 for ‘mis-selling’

Ofcom has fined Universal Utilities – trading as Unicom – £200,000 for “mis-selling landline telephone services”.

The decision also requires Unicom to take a number of steps to help compensate customers affected by the mis-selling and to guard against it happening again.

Ofcom launched the investigation into Unicom, which provides telephone and broadband services to around 100,000 small businesses, after receiving complaints from customers and having assessed evidence submitted by Unicom in the course of initial enquiries.

The investigation into Unicom is part of Ofcom’s wider monitoring and enforcement programme into the sales and marketing activities of communications providers. Under Ofcom rules, communications providers must give prospective customers accurate information about the services they are providing.

Ofcom’s investigation found that over the period investigated – from 1 March 2013 to 8 July 2014 – Unicom used sales processes that gave some prospective business customers a misleading impression about costs they could face.

Specifically, this related to Unicom giving a misleading impression about the payment of early termination charges if the prospective customer chose to leave their existing communications provider.

Over the same period, Unicom’s sales processes also misled some prospective business customers that transferring their landline telephone service to Unicom would not affect their existing broadband services.

As a result, Unicom has been found in breach of Ofcom rules, which state that providers must not engage in misleading conduct. Ofcom has imposed a fine of £200,000 against Unicom and outlined steps the company must now take.

These include compensating any customers who were misled in the relevant ways during the period investigated, allowing those customers to exit their contract with Unicom penalty-free, and covering the cost of any reconnection charges for those customers where they choose to return to their previous provider.

Ofcom has also demanded that Unicom make all necessary changes to its policies, procedures and marketing and sales materials to ensure it complies with the rules, and provide appropriate training to sales staff and introduce a system to monitor the conduct and compliance of Unicom agents.

Claudio Pollack, Ofcom consumer and content group director, said: “Small businesses in the UK increasingly rely on high-quality communications services. Service interruptions and unexpected costs can cause a real concern for these customers. Ofcom does not accept misleading practices and we will take action against companies that break the rules.”

The £200,000 fine is payable to Ofcom and then passed on to HM Treasury. Unicom must pay it within 20 working days of receiving Ofcom’s decision.

Last month, Ofcom announced an agreement from three of the UK’s largest suppliers – BT, TalkTalk and Virgin Media, which account for the majority of business broadband users – to work on a new Code of Practice for business broadband services.

The Code for business broadband, which Ofcom aims to publish in the autumn, is expected to set commitments for providers to give accurate estimates of the actual speeds that business customers will receive.

Last year, Ofcom also launched a dedicated online portal with advice for businesses on choosing and switching provider, navigating and negotiating contracts, and resolving complaints.