My Lords, when you donate to a charity using a five or six digit short text code, or call directory enquiries for a number you need or have forgotten, you are more than likely to be using premium rate services. These are added-value services, products or content that consumers can purchase by charging the cost to their phone bill or mobile pre-pay account. While these services can, and do, offer enjoyment, convenience and speed of access to users, they also demonstrate certain characteristics which have the potential to give rise to harm, in the absence of effective regulation. For this reason, it is equally important that companies comply with the rules set out by the regulator’s code of practice, which serves to ensure consumers are treated fairly and not misled or taken advantage of.
PhonepayPlus regulates the market for premium rate services, and its code of practice, having been approved by Ofcom, sets out the regulatory framework for the industry, outlining the rules and required standards for every company involved in providing premium rate services to UK consumers. For example, a person or company providing premium rate services must be up front about the services they offer, and how much they cost, before users make any purchases. They must also treat consumers fairly and resolve complaints quickly.
Under the Communications Act 2003, PhonepayPlus can impose a penalty in respect of breaches of the code. The regulator has interpreted this to mean that it can impose £250,000 in respect of each provision of the code that is breached. The proposed amendment is intended to make it absolutely clear that where it is appropriate and proportionate, the maximum fine available to the regulator is indeed for each provision of the code that has been breached. Therefore, in the event of a company making two serious contraventions of the code, the regulator could impose a fine of up to £500,000, if that is deemed appropriate and proportionate.
This clarification will impact only on the premium rate service companies whose contravention of the rules is serious. It will not impact on the majority of businesses, which are compliant. The clarification is important to the regulator so that effective sanctions continue to be available for the most serious breaches of the code, which is there to ensure that consumers are not harmed by premium rate services and can use them safely and confidently. By clarifying the regulator’s fining powers, the amendment is an important tool in ensuring the continued existence of a sufficient deterrent to non-compliant behaviour by companies or people providing premium rate services. I beg to move.