The framework features several reforms, outlined in the Ofcom Annual Plan 2019-2020, and aims to give “consumers the information they need to make informed choices and to shop around with confidence”. It will set the bar for how services are offered and delivered, the ease with which customers can switch or report a problem and how they are treated but it will also have significant ramifications for the telecoms sector itself.
FfC will see consumers made more aware of their rights in the free market created by the opening and sharing of telecoms infrastructure under the UK’s Electronic Communications Code back in 2017. All of the biggest providers (BT, EE, Giffgaff, o2, PlusNet, Post Office, Sky, TalkTalk, Tesco Mobile, Three, Virgin Media and Vodafone) have now signed up to the programme which aims to enshrine customer rights to a fair deal, support, clear information, reliable services, the right to exit a contract, and to ensure that customer care is at the heart of these companies’ cultures.
Changes in 2019
Ofcom’s FfC programme is already well under way with a number of significant goals set for this year, including…
- Broadband Speed Code of Practice – from 1 March providers need to give customers clearer information on the speeds they can expect to receive for specific broadband services. They must be given an accurate estimate of the speed in their area, a minimum guaranteed speed, and have the right to exit without being penalised, (providers have 30 calendar days to meet speed targets or must allow the customer to cancel and they must also provide exit options in after sales communications).
- Cap on Directory Services – from 1 April all calls to directory services will be price capped by the regulator to £3.65 per 90 seconds.
- Automatic Compensation – the majority of broadband/telephony providers covering 95% of the market have agreed to a money back guarantee. From 1 April compensation is automatically awarded when service is disrupted or delayed or when engineer visits are missed. Ofcom estimates there are 7.2 million such cases every year. Delayed repairs with respect to loss of service will see £8 a day awarded for every day after two working days of lost service. Missed appointments or those cancelled within less than 24 hours will incur a £25 fee while delays to the start of a service will see £5 awarded per calendar day.
- Easier Mobile Switching – from 1 July, mobile providers will need to make it easier for customers to leave. Customers will be able to text, call or email their provider to request a switch code and switch to a new provider the same day. The provider will no longer be allowed to charge for notice periods after the switching date.
- End of Contract information – providers will be obliged to tell consumers when their contract is coming to an end and to offer information on their best deals. Research reveals 20 million customers have gone beyond their initial contract period, with landline and broadband bundled customers paying a fifth more than they would have done while those taking all three services (telecoms/broadband/pay TV) were paying a quarter more than they should have.
Providers have until September to put the necessary processes in place and will need to warn customers by text, email or letter between 10 and 40 days before their contract comes to an end from February 2020.
Regulation of the mobile handset space is also imminent to address end of contract issues. Currently many consumers continue to pay the same cost monthly when their contract ends as when the handset was bundled in with the cost of the service. Ofcom intends to require mobile providers to either give a breakdown of all costs at the start of the contract/when the contract expires or to implement a fairer reduced tariff at the end of the contract. Ofcom will issue a statement on this in Q3 2019.
Differential pricing practices across all three sectors will also be examined to determine why some pay more than others for the same service with a statement due from Ofcom by year end. A report on pricing trends which assesses average prices and fluctuations attributed to tariffs and discounts will also be issued in Q3.
Threat or opportunity?
The changes being brought in under the FfC programme will require providers to put in place more processes and systems and will see customer care elevated within the organisation.
Consequently, we can expect to see customer service become more deeply ingrained in company culture and become more apparent in service provisioning. This will see customer care and remediation become a metric in its own right. There’s already evidence of this in the form of the satisfaction scores published by Ofcom at the end of April which named the best and the worst providers over the course of the year and contrasted the results with those for 2018.
As customer service becomes more transparent, providers will be placed under increasing pressure to demonstrate they take customer care seriously. Similar to the switching behaviour seen in the utility space, customer care will become a key criteria for consumers comparing service offerings. This will present a real opportunity for providers, enabling them to differentiate to attract and retain customers and to grow the customer base by developing personalised services.
There are well-documented tangible benefits associated with businesses that should make customer care a priority. Repeat custom is the obvious one (in that good customer care buys loyalty) but it also prevents churn. Research suggests that companies hear from just 4% of their disgruntled customers, suggesting the others simply defect to the competition. Good customer service can prevent this by ensuring staff are well trained, have access to product details and resources, and are able to proactively engage with customers via a range of communication channels while digital technologies such as chatbots can ensure human resource is used economically.
To deliver effective and proactive customer care, providers will need to utilise their customer data more efficiently to extract actionable insights. This will require business support systems and processes to be put in place that can gather and analyse customer data. It’s these systems that will see the CSP gradually transform into the DSP (Digital Service Provider), with the majority of Tier 1 and some Tier 2 providers expected to make the leap by 2021. DSPs will exploit new technologies (5G, IoT, blockchain…) and move into new markets (content, insurance, finance, healthcare…) enabling them to offer bundled services cross-sector.
FfC and the TCF
To see how the FfC is likely to play out, telecoms providers need only look to the financial services sector. The Financial Conduct Authority (FCA) introduced its equivalent, Treating Customers Fairly (TCF), back in July 2006. This regulatory framework saw firms required to collate Management Information (MI) from the systems put in place which was then used to further improve customer care and, if necessary, demonstrate compliance. The TCF needed to be implemented company-wide as a results of which company structures became less top heavy and bonus structures changed to incorporate customer care targets as well as sales targets, while new service offerings were aligned with the six principles too.
Thirteen years later, the TCF has established that focusing on customer care can improve the stability of the market, give providers more oversight, governance and control, and reinvigorate the market by fostering competition. During that time there’s also been a great deal of change. In the banking sector we’ve seen the disappearance of the high street branch and the introduction of Open Banking which has ushered in a raft of new competition. Both have impacted customer care, with less emphasis on front of house customer service and more on digital channels and a pressing need to defend market share. Armed with the TCF principles, banks have been able to demonstrate their ability to meet the needs of their customers with omnichannel support and have become adept at utilising this data to cross-sell to their customer base.
The future of customer regulation
There are instances where the FCA has needed to enforce the principles, however. Recent examples include the poor handling of complaints by mortgage lenders, assessing whether high-cost short-term credit providers need to do more to demonstrate affordability, and concerns over whether car finance providers are ensuring PCP borrowers are adequately informed when it comes to the credit options available to them. is now considering revising the TCF principles.
In April the FCA published a statement outlining its intentions to “strengthen and clarify firms’ duties to consumers, including consideration of the potential merits and unintended consequences of a potential private right of action for principles breaches”. In essence, this means those financial providers who fail to prove they have observed the six principles could find themselves subject to a lawsuit. This demonstrates that customer care is now a mandatory obligation that is recognised in court.
The TCF is a trailblazer for the FfC and indicates how effective regulation can be in protecting and nurturing an industry. Telecoms providers need to harness and use customer care to their advantage because the FfC initiative promises to deliver much more than assurances; it’s the key to their future. The FfC signals the start of a transformation that will see providers diversify to develop more varied and personalised services across more channels and venture into more industries. It’s the key to helping them achieve their ambitions as DSPs.
Contact us to find out more about how we work with telecoms companies to help them fulfil their operational challenges and regulatory requirements.