Communications Act 2003 (Maximum Penalty for Persistent Misuse of Network or Service) Order 2006

The order, under the Communications Act 2003, makes the following provisions. It raises from £5,000 to £50,000 the maximum penalty which the Office of Communications—Ofcom—can impose on those who persistently misuse electronic communications networks or electronic communications services, which includes silent calls. Silent calls are usually made by marketing companies, which use a computerised calling device that dials the telephone number and automatically transfers the call to an available sales agent. If an agent is unavailable to take the call it is abandoned by the dialler on answer so the recipient receives a silent call. Silent calls may also be generated by other organisations including the financial services sector, market research and companies engaged in number-scanning activities, which dial a sequence of telephone numbers to find out which ones are in service, the results of which are used to develop a ““clean list”” of numbers that have commercial value. Silent calls cause significant annoyance, inconvenience and anxiety to consumers. In research commissioned by Ofcom, 63 per cent of adults said they were concerned about silent calls, with 35 per cent of those saying they were very concerned. People aged over 65 expressed more concern, with 63 per cent saying they were very concerned, compared to 15 to 24 year-olds of whom 24 per cent said they were very concerned. Silent calls are also more likely to cause distress among women, at 38 per cent, compared to 33 per cent for men. Therefore, I am sure the Committee will agree that there is an urgent need for us to take effective action which will provide reassurance to consumers that the Government take this issue seriously. Last summer, Ofcom requested the DTI to consider raising from £5,000 to £50,000 the maximum penalty which could be levied by Ofcom on those who persistently misuse networks and services, including those who make nuisance silent calls. Ofcom gave arguments in favour of raising the penalty, including the fact that the current maximum penalty of £5,000 was not sufficient for the level of consumer harm and worry that silent calls caused, and was not a real sanction or an effective deterrent. When the Communications Act came into force in July 2003, silent calls were not a significant issue; they have emerged only in the past two years or so, and the penalties were not specially designed for the purpose of tackling silent calls. The main target of the penalty was to tackle loutish behaviour—calls from individuals such as problem neighbours, pranksters, and those from hunting or anti-hunt and  similar protest groups. Circumstances have now changed and the recent growth in the numbers of silent calls caused by commercial activity means that it is appropriate to revisit the maximum penalty level. The DTI agreed with Ofcom’s request to increase the maximum penalty to £50,000 and on 31 October 2005 launched a consultation. The proposed maximum penalty will provide a substantial deterrent to those who persistently misuse networks or services including making silent calls. Therefore, the provisions in this order were subject to public consultation, which closed on 24 January 2006. There was overwhelming support for raising the maximum penalty, and this has led us to proceed with the order to implement the increase. When taking enforcement action, Ofcom will consider all cases on a case-by-case basis, taking a firm but flexible approach and taking account of all mitigating circumstances. Ofcom will also monitor and evaluate on a regular basis how the increased maximum penalty is working and will assess whether consumers are benefiting. The Government also recognise the importance of appropriate enforcement action. We are encouraging Ofcom to use its new powers as flexibly as possible to tackle the problem of silent calls. The Government will keep the issue under review and will monitor Ofcom’s enforcement activities to ensure that it takes appropriate action. We will be happy to keep the House informed of the effectiveness of Ofcom’s actions. If it proves necessary, the maximum penalty could always be increased further. One of Ofcom’s principal duties in carrying out its functions is to further consumer interests and, under the Communications Act 2003, Ofcom can take enforcement action when it has reasonable grounds for believing that someone has engaged in persistent misuse. Ofcom does this by issuing a notification allowing a period for representations. In practice, Ofcom also requires specific measures to resolve a problem and/or improve performance. If these changes are not delivered within a specified time frame, Ofcom can impose financial penalties. Higher penalties will act as a more substantial deterrent against those who persistently misuse networks and services by, for example, making nuisance silent calls, and as a more appropriate sanction for those who inflict such widespread consumer harm. In addition, I welcome the fact that, on 1 March, Ofcom’s new rules for the use of automatic calling systems were introduced, designed to deliver additional protection to consumers from silent calls. The new measures require the following key actions to be observed: a pre-recorded message to be provided for all abandoned calls; calling line identification to be provided for all calls made, which lets the recipient know the number of the caller; not allowing numbers subject to an abandoned call to be redialled for at least 72 hours unless a dedicated agent is available; and abandoned call rates to be kept below 3 per cent of total calls for any 24-hour period. A regulatory impact assessment was carried out for this order, and the results have been published with the Government’s response to the consultation. The assessment concludes that this order introduces no additional regulatory burden for legitimate business. The order is made to strengthen the powers of Ofcom to provide better protection to consumers from nuisance silent calls. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Communications Act 2003 (Maximum Penalty for Persistent Misuse of Network or Service) Order 2006 [21st Report from the Joint Committee and 28th Report from the Merits Committee].—(Lord McKenzie of Luton.)