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Citizens Advice slams ISPs over broadband compensation proposals

BT, Sky and Virgin Media have proposed a voluntary industry code of practice for broadband compensation, but it falls short of what Ofcom would like to implement

Citizens Advice has criticised BT, Sky and Virgin Media after it emerged that the three internet service providers (ISPs) have put forward an alternative, voluntary code of practice to govern how consumers are compensated for broadband service problems, that falls short of what telecoms regulator Ofcom had previously suggested.

In its response to Ofcom’s consultation on the matter, BT said that the voluntary code of practice that it proposed alongside competitors Sky and Virgin Media “would be a much more proportionate and less onerous means of achieving Ofcom’s stated policy objectives than a prescriptive new general condition”.

However, the difference between Ofcom’s and the ISPs’ proposed compensation charges may be seen as substantial.

For complete loss of service, the regulator had wanted £10 per day beyond two working days after the ISP became aware of the loss, but the ISPs proposed £7.

For delayed installation, Ofcom wanted £6 per day beyond the date committed to in writing, but the ISPs proposed £4, which would only be payable automatically if the customer subsequently activates the service.

For a missed appointment, Ofcom wanted consumers to receive £30 for a missed visit or cancellation within 24 hours, but the ISPs proposed £10.

Citizens Advice chief executive Gillian Guy said: “A watered down compensation scheme would short-change customers by millions of pounds.”

Guy said this disparity could leave consumers with broadband service problems £52m per annum worse off. The organisation also noted that only 15% of consumers who complain to their ISPs ever receive any financial compensation, compared to 30% of complainants about utilities such as water – this was based on previous research it conducted itself.

“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,” she said.

“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,” said Guy.

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Richard Neudegg, head of regulation at consumer service comparison site uSwitch, said the attempt to reduce the proposed compensation sent the wrong message to users – namely, that broadband wasn’t actually the vital utility that mostly everybody now considers it to be.

“It isn’t just the projected £52m loss to broadband customers that hurts. The point of bringing in mandatory automatic compensation is to encourage providers to deliver a more seamless service.

“While £30 for a missed appointment may not seem enough for those who have missed a day’s work to wait in for an engineer that didn’t show, it is the collective financial burden on providers that acts as the real incentive for them to work harder at keeping appointments and reducing or, better still, eliminating service downtime,” said Neudegg.

However, Andrew Glover, chair of the Internet Service Providers’ Association (ISPA) Council, spoke up in favour of the joint proposal from BT, Sky and Virgin Media.

“The suggested compensation levels are out of proportion compared to the generally low prices that consumers pay in the UK and risk diverting resources away from rolling out faster connections throughout the country,” said Glover.

“The industry is currently engaging with Ofcom to determine the best level of compensation and Citizen Advice’s research is based on figures that are not any longer up to date. The alternative voluntary approach that has been suggested would not only provide consumers an automatic right to compensation more in line with the overall cost of broadband services but could also be implemented in a much swifter way,” he added.

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