TalkTalk and Tiscali UK fined £3 million for breaching consumer rules

18 August 2011

Ofcom today fined TalkTalk and Tiscali UK £3 million after they incorrectly billed tens of thousands of consumers for services they had not received.

Ofcom opened an investigation into TalkTalk and Tiscali UK in July 2010 following complaints from over 1,000 consumers.

Ofcom found that both companies had wrongly issued bills to consumers for services they had not received, in particular to consumers who had closed their accounts. They did so in just over 62,000 cases between 1 January and 1 November 2010. Ofcom issued both with a legally-binding notification in November 2010 and set them a deadline of 2 December 2010 to take steps to sort out their billing problems.

However, while TalkTalk and Tiscali UK did take some important steps to comply with the rules, such as making changes to their customer records management systems, they still incorrectly billed almost 3,000 consumers between 2 December 2010 and 4 March 2011.

Ofcom has therefore issued TalkTalk and Tiscali UK with a financial penalty to reflect the seriousness of their breach of the rules and to act as a deterrent to them and other telecoms companies who must comply with the rules.

Compensated consumers

TalkTalk and Tiscali UK were also required to take steps to remedy the harm they caused to consumers by 2 December 2010, for example, by paying refunds to affected customers.

TalkTalk and Tiscali UK have paid over £2.5 million in refunds and good will payments to over 65,000 affected consumers.

Financial penalty

Ofcom is able to fine companies which breach telecoms rules of up to 10 per cent of their relevant turnover.

Ofcom considers this to be a serious breach of the rules. However, Ofcom is issuing TalkTalk and Tiscali UK with a lower penalty than they might otherwise have been given, had they not taken steps towards complying with the rules, and taken action to remedy the harm they caused to consumers.

The fine is payable to Ofcom and passed on to HM Treasury. TalkTalk and Tiscali UK are required to pay it within 30 days of receiving the penalty notification.

Further details about the investigation can be found here.

ENDS

NOTES FOR EDITORS

1. Section 45(1) of the Communications Act 2003 gives Ofcom the power to set rules known as "General Conditions." General Condition 11.1 says communications providers must not send bills to customers unless every amount in those bills represents the true extent of any such service actually provided. Ofcom has found that both TalkTalk Telecom Limited and Tiscali UK Limited contravened General Condition 11.1 between 1 January and 1 November 2010.

2. In line with the rules that apply to contraventions occurring before 26 May 2011, Ofcom served a notification on TalkTalk Telecom Limited and Tiscali UK Limited under section 94 of the Communications Act 2003 on 1 November 2010. It gave them one month to comply with General Condition 11.1 and to remedy the consequences of their contravention.

3. Ofcom has now decided that, whilst both companies remedied the consequences of the contravention and took some steps to comply with the relevant condition, those steps were insufficient. Ofcom has therefore imposed a penalty on both under section 96 of the Communications Act 2003. Ofcom has imposed a penalty of £1,524,728 on TalkTalk Telecom Limited and £1,512,392 on Tiscali UK Limited, a total of £3,037,120.

4. New rules apply to contraventions of General Conditions occurring after 26 May 2011. Under these, Ofcom may issue financial penalties even where contravening providers have come into compliance and remedied their contravention. As with all providers, Ofcom will continue to monitor TalkTalk Telecom Limited's and Tiscali UK Limited's compliance with the General Conditions. We may take further action if they do not comply.