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Vodafone fined £4.6m by Ofcom for customer service failings

Wednesday, October 26th 2016 by Phil Wilkinson-Jones

Vodafone has been fined £4.6m by Ofcom for “serious and sustained” breaches of customer protection rules.

Two separate investigations by the regulator uncovered mis-selling, inaccurate billing and poor complaints handling procedures.

Vodafone said it was an “unhappy episode” for the company and admitted it had let down its customers.

Two parallel investigations were opened by Ofcom in June 2015.

One found that 10,452 pay-as-you-go mobile customers lost out when Vodafone failed to credit their accounts after they paid to top up, breaching Ofcom billing rules.

The affected customers lost a total of £150,000 between December 2013 and April 2015 because of problems caused by a move to a new billing system.

Vodafone said customers topping up mobiles that hadn’t been used for nine months received confirmation that the credit had been added to their account.

However, the phones were flagged as ‘disconnected’ on Vodafone’s system, leaving them unable to makes calls, send texts or use data.

Vodafone has since refunded almost all of the affected customers, save for 30 it says it had been “unable to track down”. It has also made a £100,000 donation to charity.

A second investigation found that Vodafone had failed to comply with rules on handling customer complaints.

'Serious and unacceptable'

According to Ofcom, the company gave customer service staff “insufficient and ambiguous information” on when to treat a customer’s call as a complaint.

Vodafone also failed to ensure complaints were escalated quickly enough and that customers would receive written notification of their right to alternative dispute resolution (ADR) after eight weeks.

The provider said it has invested £30m in customer service and training this year, including hiring an additional 1,000 new UK-based call centre workers.

It said there had been a 50% reduction in customer complaints since November 2015, although Ofcom’s most recent figures showed Vodafone was still the most complained-about mobile provider.

The company said in a statement: “This has been an unhappy episode for all of us at Vodafone: we know we let our customers down.

“We are determined to put everything right. We are also confident that our customers are already beginning to see the benefits of our substantial investment in new systems designed to meet their needs much more effectively in future.”

Lindsey Fussell, Ofcom’s consumer group director, said: “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.

“Phone services are a vital part of people’s lives, and we expect all customers to be treated fairly and in good faith. We will not hesitate to investigate and fine those who break the rules.”

Matthew Howett, of analyst firm Ovum, said: “This isn’t the first fine Ofcom have levied a fine for this type of thing, but is certainly the largest and reflects the scale of the problems Vodafone has had.

“EE were fined £1m last year for its complaints handling process and TalkTalk and Tiscali were fined £3m in 2011 also for billing issues.

“In 2015 Ofcom changed its approach to sanctions. While the changes weren’t revolutionary, they did suggest a more aggressive stance would be taken, particularly in telecoms, to protect the consumer with larger fines designed to act as a deterrent.

“Also, the ‘seriousness’ of the practice was to be given more weight when determining how severe the fines would be. I think all of that is reflected in today’s announcement.

“Vodafone would have been expecting a fine, particularly given the length and breadth of the investigation. Their conciliatory tone this morning suggests they are now trying to move on from the damage and repair reputations with customers. To that end they are investing billions in improving service, rolling out more 4G and so on.”

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