The
Committee consisted of the following
Members:
Chair: †
Annette
Brooke
†
Brennan,
Kevin (Cardiff West)
(Lab)
†
Burt,
Lorely (Solihull)
(LD)
†
Cooper,
Rosie (West Lancashire)
(Lab)
Corbyn,
Jeremy (Islington North)
(Lab)
†
Jones,
Graham (Hyndburn)
(Lab)
†
Latham,
Pauline (Mid Derbyshire)
(Con)
†
Leadsom,
Andrea (South Northamptonshire)
(Con)
†
Lee,
Jessica (Erewash)
(Con)
†
Lee,
Dr Phillip (Bracknell)
(Con)
†
Leslie,
Chris (Nottingham East)
(Lab/Co-op)
†
Newmark,
Mr Brooks (Lord Commissioner of Her Majesty's
Treasury)
†
Rees-Mogg,
Jacob (North East Somerset)
(Con)
Sheerman,
Mr Barry (Huddersfield)
(Lab/Co-op)
†
Simpson,
David (Upper Bann)
(DUP)
†
Swinson,
Jo (East Dunbartonshire)
(LD)
†
Tami,
Mark (Alyn and Deeside)
(Lab)
†
Vaizey,
Mr Edward (Parliamentary Under-Secretary of State for Business,
Innovation and Skills)
†
Walker,
Mr Robin (Worcester)
(Con)
Glenn McKee, Committee
Clerk
† attended the
Committee
Second
Delegated Legislation Committee
Monday 13 September
2010
[Annette
Brooke
in the
Chair]
Draft
Communications Act 2003 (Maximum Penalty for Persistent Misuse of
Network or Service) Order
2010
4.30
pm
The
Parliamentary Under-Secretary of State for Business, Innovation and
Skills (Mr Edward Vaizey):
I beg to
move,
That
the Committee has considered the draft Communications Act 2003 (Maximum
Penalty for Persistent Misuse of Network or Service) Order
2010.
It
is a great honour to serve under your chairmanship this afternoon, Ms
Brooke. The purpose of the order is simple. It is designed to
strengthen consumer protection and the regulatory system to more fully
deter those who persistently misuse electronic communications networks
or electronic communications services, including those who make silent
and abandoned calls to consumers. The order was debated in the other
place at the end of July and was supported by all three
parties.
According
to the definition under the Communications Act 2003, persistent misuse
occurs when someone uses an electronic communications network or
service in such a way that the effect or likely effect is to cause
another person unnecessarily to suffer annoyance, inconvenience or
anxiety. I am sure that members of the Committee will be only too aware
of constituents who suffer from silent and abandoned calls and that
they therefore agree that we need to do something to ensure that
consumers are effectively protected. The calls are particularly
concerning to vulnerable people and the
elderly.
Although
our primary focus is on silent and abandoned calls, there is a range of
other forms of persistent misuse and the proposed increased penalty
will apply equally to all those, too. Other forms include the misuse of
automated calling systems, number scanning, withholding calling line
identification facilities, using systems for dishonest gain and
misusing allocated telephone numbers. To ensure that consumers are
better protected from persistent misuse, particularly in relation to
silent and abandoned calls, the order proposes to increase the maximum
that Ofcom can impose for such misuse from £50,000 to £2
million. The fines were increased from £5,000 to £50,000
as recently as
2006.
In
most cases, silent and abandoned calls are usually made by marketing
companies, which use a computerised calling system that dials a
telephone number and automatically transfers the call to an available
sales operator whenever a call is answered. However, if no sales
operator is available, the line is disconnected, which results in the
recipient receiving an abandoned call. If a recorded information
message is not played, it becomes a silent call. Hon. Members will no
doubt appreciate that such calls are annoying and can cause
distress.
Kevin
Brennan (Cardiff West) (Lab):
Will the Minister tell us
what he thinks is an acceptable percentage of abandoned and silent
calls?
Mr
Vaizey:
I cannot tell the hon. Gentleman what I think
would be an acceptable number of abandoned calls, but Ofcom has a code
that it agrees with the industry. It is in constant discussion with the
industry about what is or is not an acceptable number of silent calls.
In the case of Barclaycard, when thousands of silent calls were made,
there was a clear
breach.
Kevin
Brennan:
I am sure that the Minister is aware that the
Ofcom accepted percentage for such calls is 3% of those made
and that that can generate millions of silent and abandoned calls each
year. Does he consider that an acceptable guideline for the
industry?
Mr
Vaizey:
I am happy to accept that it is an acceptable
guideline for the
industry.
Such
calls might also be generated by other sector groups such as market
research, financial services and so forth. They can also be the result
of firms engaged in number scanning activities that call a sequence of
numbers to determine those that are in service. The intention is
usually to develop clean lists of telephone numbers that have
commercial
value.
Research
conducted by Ofcom between December 2000 and March 2010 highlighted
that almost three quarters of respondents felt that they had been very
or fairly inconvenienced by silent calls. In the three months to June
this year, more than 5,000 concerned consumers contacted BT’s
nuisance calls bureau, which provides free help and support for
consumers in relation to such calls. For the benefit of the Opposition
spokesman, let me say that the bureau’s number is 0800 661 441.
Hon. Members might wish to record that number and
communicate it to their
constituents.
Chris
Leslie (Nottingham East) (Lab/Co-op):
Last week, a
constituent of mine reported that he had received persistent random
calls during the night and then a call, which he thought was from an
Indian call centre, purporting to sell a £20 product that would
stop late-night phone calls—a form of blackmail. He did not know
whether to report it to the police or to the nuisance hotline. Should
he have done the latter, or should he have taken it into a more
criminal
context?
Mr
Vaizey:
My advice to the hon. Gentleman’s
constituent would be to call the BT nuisance calls bureau, but he could
also contact Ofcom. He probably took the best course of action by
contacting his effective constituency MP, to raise the issue at the
highest
level.
The
hon. Member’s constituent is one of thousands of consumers who
have been plagued by this nuisance. In the first half of this year,
Ofcom received just fewer than 2,500 complaints about silent calls and
about 6,000 last year. Last month, a survey on cold calling by
Which? magazine found that a third of some 2,000 consumers had
received silent calls. In the previous Parliament, 64 Members signed an
early-day motion to highlight their concern about the nuisance. There
is, therefore, a requirement for us to take effective action, to ensure
that consumers are adequately protected.
Last
year, Ofcom asked the then Government to consider raising the maximum
penalty for persistent misuse from £50,000 to £2 million,
because it felt that the penalty did not serve as a proper sanction or
an effective deterrent to those who deliberately and persistently made
silent and abandoned calls to consumers. In 2008, Ofcom considered a
serious case in which Barclaycard was found to have made an extremely
large number of silent calls over an eight-month period. Ofcom felt
that it was hampered in that it was able to issue only a £50,000
maximum penalty. Since then, it has taken informal action against 22
companies.
Ofcom
has other penalty powers, including turnover-based broadcasting powers,
which it used effectively in relation to the 2007 premium rate service
phone-in scandal, in which GMTV was fined £2 million.
Ofcom’s view is that as there is no actual financial loss, harm
can be difficult to quantify in relation to silent calls—picking
up the point made by the hon. Member for Nottingham East—but
consumers might suffer just as much. In such situations, a £2
million maximum penalty does not seem
unreasonable.
Graham
Jones (Hyndburn) (Lab):
Will the Minister be more specific
about the effectiveness of the informal actions regarding the 22
companies?
Mr
Vaizey:
I understand that Ofcom considers taking specific
action and imposing fines on companies as a last resort, and therefore
when companies appear to be in breach of the code, informal contact is
always in the interests of both Ofcom and the companies. Such action
was taken by Ofcom in those circumstances, and I understand that
breaches of the code then
desisted.
A
12-week public consultation on the order was undertaken between October
2009 and January 2010, and 126 out of 137 respondents favoured an
increase in the maximum penalty, to £2 million. A further seven
respondents favoured an increase of some kind, and only three did not
favour any increase. The proposed increased penalty will help to
provide a more substantial deterrent to most call centres with up to
400 employees. It is possible that larger call centres might not be
fully deterred, but it is likely that the negative media publicity of a
£2 million penalty will help to deter even those operations from
making silent and abandoned
calls.
Ofcom
will work on a case-by-case basis whenever enforcement is necessary, by
taking a firm but flexible approach towards anyone who makes silent and
abandoned calls or engages in any other form of persistent misuse.
Ofcom will continue to monitor complaints and other cases that it
receives and will work in close association with the various nuisance
call bureaux. That will enable Ofcom to identify trends and patterns in
silent and abandoned call rates, as well as the companies that make
calls of that nature. Ofcom will use its formal powers to request
information and will take strong action, including the use of financial
penalties when
appropriate.
One
of Ofcom’s main duties requires it to act in the interests of
consumers. Under the Communication Act 2003, Ofcom is able
to take enforcement action in cases where it has reasonable grounds for
believing that an offender has engaged in persistent misuse. Under
section 128 of the 2003 Act, Ofcom can issue a financial penalty to an
organisation that it notifies, and it can
notify whenever it has sufficient evidence to show that an offending
company has failed to act in line with Ofcom’s policy on silent
and abandoned calls. In considering the penalty, careful account is
taken of the extent of the identified misuse, and the proposed penalty
increase will allow Ofcom to issue a more proportionate penalty that
more fully fits the seriousness of the
offence.
We
believe that the order will ensure that consumers are more fully
protected from silent and abandoned calls by implementing an increased
and more appropriate penalty, which is more consistent with the harm
that such calls cause to many consumers. In addition, the order will
help to reduce the need for many consumers to spend money on
experimenting to find out whether any commercially available product or
service helps to keep silent and abandoned calls at
bay.
I
thank members of the Committee for their consideration of the order
today. It is intended to strengthen the Ofcom’s powers, to
ensure that consumers are more effectively protected from silent and
abandoned calls. It is therefore right that we give careful
consideration to the issue. I commend the order to the
House.
4.42
pm
Kevin
Brennan:
Thank you, Ms Brooke, for chairing today’s
proceedings. It is a great pleasure to serve for the first time under
your
chairmanship.
I
commend the Government for bringing the order forward. As the Minister
knows, it was initiated by the previous Government and therefore he
will not be surprised to learn that I will not be asking my hon.
Friends to oppose it this afternoon. However, we need to explore a
series of issues as well as the way forward following, hopefully, the
passage of the order this
afternoon.
The
Minister will be aware from the assiduous research that he will have
done in preparation for the Committee that, in 2004, when I was on the
Back Benches, I introduced a ten-minute Bill on this
subject—corporate nuisance telephone calls —and I am sad
that we are still discussing that. Although my Bill, owing to the
errors of Parliament’s ways, did not make it on to the statute
book, it had an impact in generating the kind of debate that led to
measures to increase the seriousness of the fines that Ofcom can levy.
However, we are still discussing it. It is right to raise the fine to
£2 million, and the Government correctly decided to take the
measure forward, because a £50,000 fine was simply not enough to
deter the really big players in the market. However, the problem
clearly persists. The Government need to consider what else can be done
in addition to passing the statutory instrument before us this
afternoon.
I
am going to make a rather shameful confession. As a small
boy—not all of us are entirely without sin when we are
younger—I occasionally used to go with some of my friends, knock
on people’s doors and run away. In my part of the world, we
called that game knockout
ginger.
Mark
Tami (Alyn and Deeside) (Lab):
Knock down
ginger.
Kevin
Brennan:
I know that it has different names in other parts
of the country. Those who had a misspent youth, like my hon. Friend and
me, are aware of that game. It is a shameful practice and we were
rightly
admonished and punished whenever we were caught. Corporate nuisance
calls are the telecoms equivalent of that game. What happens is that
companies, operating legally in the United Kingdom, phone up citizens
in their homes in the full knowledge that a percentage of those phone
calls will result in a nuisance, silent call or an abandoned call
leading to a recorded message, rather than to a human being at the
other end of the line. That is part of the business model.
Unfortunately, the predictive dialling equipment from time to time
dials more people than there are live operators available—more
calls are answered than was predicted, so a silent call or, more often
these days, a call containing a recorded message
results.
Lorely
Burt (Solihull) (LD):
I never played knock down ginger,
but does the hon. Gentleman not agree that, whatever the misdemeanour,
the possibility of getting caught is what most deters a small boy, or
an organisation, from taking an illegal action? That is what we should
be considering, to ensure that Ofcom not only finds out who is
perpetrating the illegal calls, but prosecutes
them.
Kevin
Brennan:
In my case, the possibility of being caught was
quite strong—indeed, it happened on several occasions. The
certainty of a belting from my dad was also a strong possibility in
such
circumstances.
The
hon. Lady is absolutely right. It is important that, as well as the
deterrent being sufficient, companies are put off carrying out the
practice because they have the feeling that a fine on that scale might
be possible. That is part of the argument that I want to develop about
Ofcom’s responsibility in addition to the statutory instrument,
which gives it the level of fine that it requested from the Government
to deal with the
problem.
I
was slightly disappointed when the Minister indicated in his response
to my intervention that he felt a 3% failure rate was
acceptable. When I introduced my Bill in 2004, the Direct Marketing
Association’s industry standard was a 5% rate. That has been
reduced. However, in 2004, just one company was found to have breached
the regulations—Kitchens Direct. It made 11 million phone calls
to households, which meant that under the industry standard current at
the time, it could have made 559,999 corporate nuisance phone calls and
still been within the industry standard. Even under the current
provision it could be making more than 340,000 calls—I leave
hon. Members to do the exact maths—without falling foul of the
guidelines issued by
Ofcom.
I
ask the Minister to reconsider his view that the current 3% figure is
defensible. That might have been the case when the issue was first
highlighted. However, many years down the line, any tolerance level of
such phone calls is less
defensible.
In
addition to the increased fines outlined in the statutory instrument, I
ask the Minister to engage with Ofcom further—as he said, it has
a duty to act in the interests of consumers. Will he undertake to the
Committee that he will meet with Ofcom to discuss a sharp tightening of
the guidelines on the acceptable number of abandoned calls, with the
aim of setting out a timetable to eradicate such calls altogether from
our national life? Will he press Ofcom to make more use of the powers
it already
has on behalf of consumers, who are fed up with those continual abuses?
There are still thousands of complaints about the problem. I am sure
that colleagues have had complaints from constituents about the
practice—I certainly have had many. Finally, will he report back
to the House, before it rises for the Christmas recess, on his talks
with Ofcom, so that we can hear how we are progressing on the
issue?
I
welcome the Government’s decision to support the statutory
instrument. Some pressure needs to be applied alongside it, however, to
sensitive places at Ofcom to ensure a general movement—in
addition to the additional deterrents—towards reducing what is
deemed an acceptable level under the guidance on such
calls.
4.50
pm
Lorely
Burt:
May I welcome you to your new position, Ms Brooke? I
know that you will bring wisdom and fairness to all the proceedings
over which you will preside. I also say to colleagues who are not as
familiar with you as I am that you will keep us all in order, which is
to be
welcomed.
I
welcome the order. I am a veteran of the Committee that discussed the
silent calls SI in 2006, when we raised the penalty from £5,000
to £50,000. Nevertheless, I should like to ask the Minister the
same question as I asked then—will it work? I agree that the
penalty of £2 million is a much more appropriate
level for large organisations, considering the degree of nuisance that
they are capable of causing people. It is important, however, that
companies are seen to be punished. I urge the Minister to review his
statement that Ofcom will use prosecution only as a last resort. The
problem is that a gently, gently approach, as the hon. Member for
Cardiff West said, has not necessarily worked in relation to
eliminating this disturbing and unpleasant
practice.
How
many prosecutions has Ofcom made since 2006? If the Minister does not
know the answer, will he respond to me in writing? We look forward to
the post-implementation review in 2013 and I welcome the fact that the
Government are committed to pre and post-implementation reviews of all
forms of legislation, because it is important to see whether it works.
We pass it in good faith, but it is important to conduct that
measurement. Will the Minister include the number of prosecutions, as
well as the other factors that he will measure, in the
post-implementation review in order to assess whether the statutory
instrument
works?
4.53
pm
Chris
Leslie:
I rise only briefly to add to the hon.
Lady’s point, which I support. It is incredibly important to
publicise not only the hotline details to enable the public to report
problems, but the progress of prosecutions and the extent to which they
are successful. It reminds me of the New York and Giuliani
“broken windows” syndrome and the approach to reporting
crimes or activities that could have been dealt with. The whole point
of that process was that the cycle was completed by the member of the
public who reported an incident actually seeing a response to
it.
Will
the Minister set up a website via his Department, Ofcom or BT that
allows the public to see the top current abuses? Will he also publicise
more radically and proactively how people can deal with and crack
down on complaints—perhaps such information could be included on
phone bills—and advise them on what they should do? The public
could get one back on the offender by keeping them on the phone for
longer and racking up their call time. The public have a deep sense
that nothing can be done and that they are just one of millions, so
they often do not bother reporting these things. I get the sense that
many hon. Members will want a much more proactive approach from the
authorities on all sides, to send out a tough message that goes beyond
simply increasing the penalty, welcome though that
is.
4.55
pm
Mr
Vaizey:
I thank hon. Members for their extremely valuable
contributions. I am not simply going through the motions in saying
that; I can reveal, for example, that I had absolutely no idea that the
hon. Member for Cardiff West introduced a ten-minute Bill in 2004. My
research was pretty assiduous, but it did not throw up that fact. I am
delighted that he is so well informed and interested in the issue,
because I will happily say that I, as a constituency MP, regard it as
one that should be tackled on behalf of all our constituents.
I would like
to address the specific points raised before making some more general
remarks. The hon. Member for Cardiff West said that he felt that the
3% failure rate was unacceptable, given that some companies
make millions or even tens of millions of phone calls, and 3%, which
appears to be a small figure, may turn out to be a very large figure.
In response, the 3% is a guideline and Ofcom takes into account other
factors in deciding whether to take enforcement action within its
guidelines. Those factors include whether the company plays a message,
so that where the call is abandoned there is at least a recorded
message explaining what has happened; maintains a period of grace of
three days before it calls the number again; provides calling line
identification, to which I referred earlier, so the consumer knows who
has called them by dialling 1471; and maintains a 15-second ringing
time to allow the recipient of the call to have the chance to pick up
the
phone.
The
hon. Gentleman referred to knock down ginger as a corollary of the
silent calls, but I would say that canvassing during an election could
be a similar example. Perhaps one occasionally does not leave enough
time for the constituent to open the door to hear the virtuous policies
that one is proposing, and is already halfway down the street when they
open that door having got up from the television set in the middle of
the Champions League final. It is very important that the guidelines
are taken into account.
The hon.
Member for Solihull made a valuable contribution. Again, I confess that
my research was not assiduous enough for me to realise that she is now
a veteran of this legislation. She has been here once before, she is
here again, and, from the tone of her remarks, I suspect that she does
not want to be here for a third time, so we had better get it right. My
understanding is that since 2006, nine companies have had enforcement
action taken against them, and two of them received the maximum fine of
£50,000.
Lorely
Burt:
Given all the companies conducting silent calls,
does the Minister consider nine prosecutions in that period as being
enough to put off organisations from conducting
them?
Mr
Vaizey:
Perhaps I might answer that question in a general
fashion when I wind up, because I want to take on effectively the
points all three hon. Members made about the need for Ofcom to take a
more proactive stance. I will not make a value judgment on whether nine
companies is an adequate response. As I said earlier, I think, 22
companies have been informally approached, and, obviously, I am not
privy to Ofcom’s inner workings and how it is proceeding. It
might be a further failure of my research that I have not established
in general the number of companies in which Ofcom has taken an
interest, even before engaging in formal discussions about their breach
of the code.
The hon.
Member for Nottingham East, a former Minister whose return to the House
is welcome, asked whether there should not be a website detailing the
number of prosecutions and updating consumers on the action being taken
by Ofcom. The Ofcom website offers consumers detailed guidance and
reporting on how to deal with silent calls, but I think that he was
making the wider point that Ofcom should show the frustrated consumer
or constituent what it is doing to tackle the problem. I recognise the
thrust of his remarks, which is that our constituents are deeply
frustrated by having to deal with a range of different problems and
might feel that the organisations that are meant to be taking
responsibility for those problems are not doing enough. Sometimes that
complaint is genuine; sometimes it arises because our constituents do
not have access to information reassuring them that action is being
taken.
I am meeting
the chief executive of Ofcom tomorrow, and the issue will be on the
agenda. I take from this Committee a strong message that, although the
increase in fine is welcome, Ofcom must be seen to do more to tackle
the issue. I shall discuss with the chief executive what low-cost,
light-approach methods might be possible: perhaps, for example, a basic
webpage keeping consumers abreast of concerns. As my officials and I
were preparing for the Committee this morning, I asked them how we
publicise information on where a consumer can take a complaint. I
certainly intend to discuss with some phone companies, for example,
putting clear messages on phone bills so consumers know where to
complain about nuisance calls. As hon. Members will be all too aware,
the fact that I have read out the number in the Committee does not, I
am afraid, mean that the number will be broadcast to a wider public,
apart from a few dedicated viewers of the Parliament
channel.
Kevin
Brennan:
I am delighted that the Minister is meeting Ofcom
tomorrow. I do not expect him to commit to policy directions on the
hoof in Committee, but will he at least undertake to discuss with the
chief executive the possibility of tightening the guideline percentage
for what is deemed to be an acceptable number of phone calls, and
report back to the Committee on the outcome of the discussions? I think
that we are all interested to keep the pressure
on.
Mr
Vaizey:
Absolutely. I should also have mentioned that
Ofcom has undertaken a consultation on its silent calls policy. The
consultation concluded at the end of July, and the results should
emerge shortly. I will certainly undertake to write to all Committee
members after my meeting with the chief executive tomorrow, and I will
ensure that I discuss with him not only the policy
guidelines but the wider issues raised by the Committee about
publication, enforcement and the general need for Ofcom to deal as
effectively as possible with the problem of silent and abandoned
calls.
With
those reassurances and my genuine gratitude for hon. Members’
valuable contributions, I commend the order to the Committee.
Question put
and agreed to.
Resolved,
That the
Committee has considered the draft Communications Act 2003 (Maximum
Penalty for Persistent Misuse of Network or Service) Order
2010.
5.4
pm
Committee
rose.