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ISPs agree to Ofcom broadband compensation proposals

BT, Sky, TalkTalk, Virgin Media and Zen Internet have agreed to introduce automatic compensation for consumers when their broadband service goes down

Internet service providers (ISPs) representing 90% of UK consumers will in future provide automatic compensation for broadband consumers who suffer slow repairs, missed appointments or delayed installations, following a review of customer service practice by Ofcom.

BT, Sky, TalkTalk, Virgin Media and Zen Internet have all agreed to the regulator’s proposals, which could see consumers in line for £142m in compensation, nine times more than the ISPs pay out under the current system, which requires consumers to proactively claim money back.

Today, compensation is paid out in only around one in seven cases of consumers suffering from slow repairs, missed appointments or delayed installations – something Ofcom is keen to address.

“Waiting too long for your landline or broadband to be fixed is frustrating enough, without having to fight for compensation,” said Ofcom consumer group director Lindsey Fussell.

“So providers will have to pay money back automatically, whenever repairs or installations don’t happen on time, or an engineer doesn’t turn up. People will get the money they deserve, while providers will want to work harder to improve their service.”

Under the new scheme, consumers will receive £8 a day for each day the broadband service is not repaired if it stops working and is not fixed after two working days; £25 per missed appointment if an engineer does not turn up or if an appointment is cancelled with less than 24 hours’ notice; and £5 for each day the activation of a new service is set to start, if the provider promises to start a new service on a set date but fails to do so.

The signatories will be allowed a 15-month grace period to ensure their billing systems, online accounts and customer contact centres are all up to speed and able to handle the new system. Ofcom said it would continue to monitor the situation and will take further steps if, after one year, things don’t seem to be changing.

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Alex Neill, managing director of home services at consumer advocacy organisation Which?, said: “We are pleased that compensation for poor broadband is going to become automatic, as it is now such an essential part of all of our everyday lives.

“For all consumers to get what they’re entitled to, it’s vital that all providers play fair and sign up to this scheme.”

Rob Hilborn, head of strategy at broadband comparison site Broadband Genie, said: “Delayed repairs, missed appointments and slow setups can really put people out, possibly making them lose faith in their provider. Complaining about what may be seen as minor issues can be a lengthy process, with minimal reward.

“The risk of a financial penalty should encourage providers to step up and quickly solve problems rather than letting them drag out,” he said. “It’s great news for broadband and landline customers. Hopefully we’ll see a successful implementation over the next 15 months.”

Cable consumer telecoms analyst Dan Howdle said: “This should be viewed more as a way to force providers to spend money improving service-levels across the next 15 months (when these measures will finally be implemented) so these problems do not occur in the first place – to vastly increase the cost of their failure.”

Benefits for SMEs

The proposed compensation plan will also bring benefits to small and medium-sized enterprises (SMEs) because many still choose to operate using residential landline and broadband services. Up to a third are thought eschew the higher prices of business-grade connectivity packages, according to Ofcom.

However, the regulator added, many standard business contracts already provide compensation for similar problems, but around half of SMEs are not fully aware of this.

To address this problem, Ofcom is also set to bring in new rules that are supposed to ensure SMEs are given clearer and more detailed information upfront about their broadband service, which will include in what circumstances they can claim compensation.

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