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

21 August 2017

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. Separate research by Citizens Advice on complaints finds that currently only 15% of consumers who complain to their telecoms providers receive any kind of financial compensation. By contrast twice as many (30%) 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 PDF 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 as much as £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. This was calculated by taking the difference between Ofcom’s proposed amounts for automatic compensation and the industry’s and applying this to Ofcom’s estimates for how much compensation in total they expect to be paid under their scheme.

People sought Citizens Advice’s help with 7,500 problems with their internet service providers and 3,500 problems with landline telephone services in the year between July 2016 and June 2017.

An analysis of 1,000 cases reported to the Citizens Advice consumer service between August 2016 and May 2017 indicates that 18% of the consumers who call our helpline with broadband problems would be eligible to receive a payment under Ofcom’s proposed scheme.

Of those that would have been eligible, 31% experienced a delay to repairs, 64% experienced delayed activation of their broadband and 5% experienced missed appointments.

Gillian Guy, chief executive of Citizens Advice, said:

“A watered down compensation scheme would shortchange 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 £1.5billion 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.

Notes to editors

  1. The calculation for how much less compensation would be paid under the industry scheme was calculated using Ofcom’s estimate for how much in total it expected to paid under its scheme PDF . The percentage difference between the industry and Ofcom proposed individual payments was then applied to this overall total. This is likely to be an underestimate of the how much consumers might lose as the industry’s proposed scheme also allows providers to place a cap on total payments, and to only pay compensation for delayed activation if the customer subsequently activates the service.

    Loss of service

    Delayed activation

    Missed appointment

    Total

    Ofcom total estimate (£m)

    83.1 - 120.5

    73.2

    7.4

    163.7 - 201.1

    Reduction of individual payments under industry scheme

    30% (£10 to £7 per day)

    33.33 % (£6 to £4 per day)

    33.33% (£30 to £20)

    N/A

    Max total industry payment (£m)

    58.17 - 84.35

    48.8

    4.93

    111.9 - 138.08

    Min. reduction in consumer compensation (£m)

    24.93 - 36.15

    24.4

    2.47

    51.8 - 63.02

  2. Figures for levels of compensation paid in response to complaints by telecoms providers, compared to other essential industries, are from an analysis of a survey conducted by DJS Research on behalf of Citizens Advice between 5 January and 18 January 2016.
  3. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  4. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  5. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  6. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  7. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  8. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.