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Vodafone fined £4.6m for failing customers

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Written by: Adam Lewis
26/10/2016
Vodafone is to be fined £4.6m by the telecoms regulator Ofcom for serious and sustained breaches of consumer protection rules.

In June last year the regulator launched two parallel investigations into the telecoms giant, the first looking into its pay-as-you practices and the second investigating its complaints handling procedures.

The first investigation revealed that 10,452 pay-as-you-go customers lost out when Vodafone failed to credit their accounts after they had paid their ‘top up’ mobile credit. The affected customers lost £150,000 over a 17-month period.

For not providing a service in return, which stemmed from problems with the company transferring to a new billing system, Ofcom fined Vodafone £3,700,000. The regulator said the company had breached its billing rules because top ups bought in good faith were not reflected in the credit balances of consumers. At the same time Vodafone was accused of not taking quick enough action to identify or address the billing problems, and only took steps to reimburse those affected after Ofcom intervened.

For failing to comply with Ofcom’s rules on handling customer complaints, the subject of the second investigation, Vodafone was fined £925,000.

The investigation found Vodafone did not provide sufficiently clear guidance to its frontline customer service staff on what constituted a complaint, while its processes were insufficient to ensure all complaints were escalated quickly enough or dealt with in a fair, timely manner.

Its procedures also failed to ensure customers were told, in writing, of their right to take an unresolved complaint to a third-party resolution scheme after eight weeks.

Reflecting Vodafone’s agreement to enter into a formal settlement, the two penalties – which must be paid to Ofcom in 20 working days and then passed on to HM Treasury – incorporate a 7.5% reduction.

Vodafone has also reimbursed all customers who faced financial loss, except for 30 it could not identify, while it also made a £100,000 donation to charity.

Simon McCulloch, commercial director at comparethemarket.com, said: “Vodafone’s fine is a welcome signal that poor customer service will not go unpunished. Pay-as-you-go users, who are often unable to commit to big contracts, can too often be treated as second-class customers. With mobile phones being such a key part of daily life, we are less inclined to scrutinise the costs we are being charged by our suppliers. This is particularly the case with relatively small amounts of money, such as with top-up mobile accounts. This means that people tend not to switch provider, or hold them to account for poor customer care.

“This should be a wake-up call for the mobile phone industry. Mobile giants have been able to get away with poor levels of customer service and uncompetitive practices for too long, safe in the knowledge there is less likelihood this will be noticeable and therefore won’t prompt people to switch. Be sure to check your bills closely, and if you don’t like what you see question your provider, or simply switch to a new provider.”

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