Guest blog: 'Persistent misuse': Insight into Ofcom's revised Statement of Policy
16 May 2017
Eric Bash, Principal of Ofcom’s Consumer Group, spoke at the Credit Services Association’s Annual Members’ Meeting earlier this year about Ofcom’s revised statement of policy on ‘persistent misuse’. This was the first talk given by Ofcom since the revised policy was published in November 2016 and provided CSA members with valuable insight into how to prepare for its introduction on 1 March 2017.
The Communications Act 2003 empowers Ofcom to take action against those engaged in ‘persistent misuse’ of an electronic communications network or service. Misuse is defined as use of a network causing, or being likely to cause, annoyance, inconvenience and anxiety to consumers. Persistent means this kind of misuse being repeated enough to represent a pattern of behaviour or practice or recklessness about whether others suffer relevant harm.
These terms are defined by statute, not Ofcom. In the revised policy statement, Ofcom gives examples of conduct that could constitute misuse, as well as examples of conduct that might aggravate the consumer harm caused by any persistent misuse, and thus enhance the likelihood that Ofcom would take action.
The statement identifies calls at ‘unsociable hours’ as more harmful to consumers, and therefore more likely to be the subject of enforcement action. For example, calling a consumer repeatedly, or for marketing purposes, in the middle of the night.
It is down to companies to determine, against this backdrop, their appropriate course of action in terms of what conduct would constitute misuse.
Under the Act, the maximum penalty is £2m and Ofcom is required to prepare and publish a policy statement with respect to exercise of its powers.
What is the evidence of harm caused by ‘persistent misuse’?
At Ofcom, we receive around 4,000 complaints per month with silent calls being the most complained about. We also carry out consumer research which shows that of the 4.8bn calls received by landline telephones per year, 1.5bn are silent, 200m are abandoned, and 943m are recorded.
Why has Ofcom revised its policy statement on ‘persistent misuse’?
Our policy statement on ‘persistent misuse’ hadn’t been updated since 2010 and it needed updating to ensure that it is as effective as possible at reducing calls that cause the greatest harm to consumers and making enforcement more targeted. We issued a consultation in December 2015 and worked with a wide range of stakeholders on a revised policy.
What will this mean for the debt collection sector?
The main focus of the policy on the debt collection sector is on silent and abandoned telephone calls and our prioritisation of enforcement action wherever forms of misuse cause significant consumer harm.
A calling party, such as a call centre, can be liable for persistent misuse caused by it; a company that engages someone else, such as a call centre, to make calls on its behalf can also be liable. This means that a debt collector that make calls for an entity owed a debt can be liable for misuse; the entity owed the debt that engaged the debt collector to make calls on its behalf can be liable for misuse; and a call centre engaged by either to make calls on its behalf can be liable for misuse. Where more than one entity is involved in causing calls to be made, Ofcom would determine on a case-by-case basis which entity is the appropriate target in any investigation. It is up to all parties engaged in calls to have effective practices and procedures in place, and to ensure that they are adhered to, monitored, and regularly reviewed, in order to minimise misuse.
A campaign in the debt collection context could be calling activity on behalf of a single client. If multiple call centres are calling on behalf of that single client, they would be part of a single campaign.
In the development of the revised policy, we took on board the Credit Services Association’s concerns that proposals to impose zero tolerance on abandoned calls would make the compliant use of automated dialling systems impossible and instead said that we will apply the statutory definitions of both persistence and misuse on a case-by-case basis. We will focus on where consumer harm is greatest, with initial determination based on complaints and traffic volume.
Firms will need to carefully consider how their practices will be considered by us, rather than just taking a ‘tick box’ approach to compliance. The policy also covers ‘agent behaviour’ which firms will need to take account of in line with other forms of regulation (see how we will work with other regulators below).
How will breaches of the new policy be investigated and enforced?
Enforcement will be based on the level of risk to consumers from the misconduct and misconduct that is repeated and deliberate.
We will investigate suspected cases of ‘persistent misuse’ by gathering evidence of calling activity and looking at policies and procedures for managing silent/abandoned calls and complaints. We will then assess this evidence and provide a provisional decision to the firm, before making a final decision and issuing a penalty.
Because of how easy and inexpensive it is to make large volumes of calls, particularly automated calls, the size of a company may have little bearing on the degree to which its activity causes harm. A large, well-run call centre may generate a smaller volume of problematic calls than a badly run small call centre. In such cases, the small call centre is causing more harm.
How will Ofcom work with other regulators?
Where the conduct at issue might violate standards enforced by another regulator, Ofcom would ordinarily consult with the other regulator in advance of an investigation to determine which regulator is better positioned to address the conduct. For example, as is explained in the revised policy statement, although the same conduct may constitute both persistent misuse (subject to enforcement by Ofcom) and a breach of the Privacy & Electronic Communications Regulation (2003) (subject to enforcement by the Information Commissioner’s Office, or ICO), Ofcom would usually consult with the ICO to determine which authority is best placed to take the most appropriate course of action.
What else is Ofcom doing to reduce harm to consumers?
As well as reacting to policy breaches, we will be taking a proactive approach to reducing harm to consumers as a result of ‘persistent misuse’ by engaging with communications providers to block calls and consulting on consumer protection General Conditions.