Culture, Media and Sport Committee - Minutes of EvidenceHC 636

Back to Report

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 3 September 2013

Members present:

Mr John Whittingdale (Chair)

Mr Ben Bradshaw

Angie Bray

Conor Burns

Tracey Crouch

Philip Davies

Paul Farrelly

Jim Sheridan

Mr Gerry Sutcliffe

________________

Examination of Witnesses

Witnesses: Richard Lloyd, Executive Director, Which?, Claire Milne, Consumer Forum for Communications and David Hickson, Fair Telecoms Campaign, gave evidence.

Q1 Chair: Good morning, everybody. This morning the Committee is holding the first of two short sessions on nuisance telephone calls. I would like to welcome our first panel, Richard Lloyd, the Executive Director of Which?, Claire Milne, the Chair of Consumer Forum for Communications, and David Hickson of the Fair Telecoms Campaign. I will invite Tracey Crouch to begin.

Tracey Crouch: Could you start off by defining what you think are nuisance calls and then follow up with an explanation of what you think is the scale of the problem?

Richard Lloyd: Thank you for holding this inquiry. We at Which? think it is an important step along the way to getting more action taken on this problem, about which a lot of people have been complaining to us and other consumer organisations for some time.

We define nuisance calls very simply as unwanted, persistent, unsolicited telephone calls or texts for marketing purposes. We have often used "nuisance calls" as shorthand for a problem that is not confined solely to handset-to-handset calls. It is a problem of unsolicited text messages as well. In our most recent market research on this in May, we found that 85% of people said they had had an unsolicited call or text in the previous month. That is a pretty big proportion of the population and included people who had signed up to the Telephone Preference Service and asked not to be contacted for marketing purposes.

The reason why we are keen to see the Committee look into this and see action taken by regulators and the Government is that it is a growing problem. More people have come to Which? complaining about this and the significant proportion of people who have had this nuisance, either through phone calls or texts, are now saying that they do not want to answer the phone because they are fearful that it will be an unsolicited marketing call. I think that is a significant problem for elderly people and vulnerable people at home during the day, who are particularly likely to get that kind of call.

Claire Milne: I agree pretty much with what Richard has said, but I would add to it. He said that the calls are made for marketing purposes and that is, of course, by a long way the bulk of the calls that are included as nuisance, but I would not exclude a worse class of calls, which are basically scams and criminal activity. Of course, they have much more serious effects than bona fide marketing, which is merely a nuisance. They are small in number, but I do think we need to pay special attention to them and I would include them in the classification of nuisance calls.

David Hickson: A simple definition of "nuisance" is something that takes the time and attention of the person who is disturbed where there is some element of impropriety on behalf of the caller. I think I would use that definition. We must go well beyond direct marketing. One of the major causes of silent calls is the use of automated diallers by debt collection agencies. That is not marketing. It was for that industry that automated diallers were developed in the first place in the United States. That is something else we have to consider within the scope; it is not just about direct marketing. All sorts of approaches are made, including by the collections industry, which are improper and need to come within the scope of what is nuisance.

The scale of the problem is such that the ambition of the direct marketing industry for telemarketing to represent what a former chairman of the TeleMarketing Group called "the welcome call" is lost. Any hope for us to see a telemarketing call as a welcome call in the general sense has gone. Whether that is the fault of those who are behaving honestly or not, I fear this is a lost cause, not deservedly so necessarily, but I think we have to look at things now in the context that tighter regulation, getting the thing a bit better under control, could make people happy to receive marketing calls from companies they were pleased to hear from. I am not sure that is ever going to happen and that is something worse we must consider as we look to what needs to be done to move forward.

Q2 Tracey Crouch: As three people who deal with the victims of these nuisance calls regularly, do you think that people are more aggrieved by receiving a call or receiving a text message?

Richard Lloyd: My personal view is that calls are the most egregious, and that is partly to do with who is more likely to receive them. I completely accept the point made by Claire and David that this is not solely about marketing calls, but that is by far and away the bulk of the unsolicited calls that people are getting at home on their landline. It involves more nuisance. It involves, very often, people who are home during the day and therefore a lot more likely to be elderly, as I said before. I think the text message is a nuisance, but it is rather less intrusive than a call on your landline during the day.

Q3 Tracey Crouch: You referenced PPI in your evidence, but can you give examples of other marketing agencies or industries that are using this kind of system?

Richard Lloyd: What is extraordinary is that we found in our research that the majority of calls are done by firms, claims management companies in particular, on PPI, payment protection insurance claims or personal injury claims. That is the majority at the moment. What is extraordinary is the range of reputable brands, often large businesses, that are making unsolicited calls to people, for example energy companies. Recently, we have seen two major energy suppliers commit to not doing this because they are aware of the damage to their reputation. This is not confined to any one sector. It is just that claims management companies are particularly active in this area at the moment and are generating the majority of calls right now. It will move on somewhere else.

Q4 Tracey Crouch: Are the calls that are being received always from a withheld number or do they come up with an 0845 number? Can you identify before you answer the phone who it is?

Richard Lloyd: It is a mix. Very often people have told us that there is no caller identification, but equally in many cases you can see it. I think the problem for most people, whether you can see the number or not, is that it is a nuisance anyway and what you subsequently have to do to make a complaint about that call is too complicated, which I am sure we will move on to discuss. There is a big problem of caller identification being withheld, but equally there are many companies that do not withhold it.

Q5 Mr Bradshaw: I have not answered my telephone for years. I filter all my calls through an answering machine. Why can’t people simply do that?

Richard Lloyd: It is true. With all due respect, Ben, that is a basic way of dealing with that. That said, if you are at home expecting a call you will probably run and pick it up.

Q6 Mr Bradshaw: I don’t understand why anyone would ever pick up the phone before hearing who it is through the answering machine.

Richard Lloyd: I agree, but we have had people come to Which? and say, "I have been waiting for an urgent call from a hospital to tell me what is happening to my elderly relative who is in care and in a serious situation. The last thing I want is to wait and see whether the caller is legitimate or not to take that call." Their behaviour is not always to wait and screen through an answering machine. More people are buying equipment now to screen out calls, but again why should the burden be on the customer, on the person at home? Very often the people who have come to us most aggrieved about this have been waiting for an urgent call. Why should they have to wait to see whether it is a claims management company trying to sell them PPI claims or a hospital or a relative or someone from overseas?

Claire Milne: Could I come in there? I think that is a very good question because it illustrates the fact that we have a lot of different attitudes among us towards use of the phone. You may be perfectly happy screening all your calls through an answering machine. I work from home and I would not be. As a freelance consultant, my work leads come in through the phone so I am not going to put off somebody who might ask me to do an important piece of work by having them get anything other than a nice friendly personal reply from me. You are entitled to do things your way, and a lot of other people probably do that. I think a lot of people, particularly young people, are giving up fixed lines altogether and they are not bothered at the moment by nuisance calls but just wait, nuisance calls are on their way to mobiles.

David Hickson: Could I just put the question back? Are you happy when you make calls to be answered by an answering machine and would you invariably leave a message?

Mr Bradshaw: I was going to come on to that.

David Hickson: If I would like to speak to you, I might find I need to answer the phone in person.

Q7 Mr Bradshaw: I do not mind speaking to an answering machine, but I was going to come on to that question. I am sure colleagues will want to pursue this later. I regularly ring up my constituents; I cold call them all the time to ask if they have any problems or concerns that I can help with, and they generally appreciate my calls. Can you give the Committee an assurance that nothing that you would like to see happen would prevent me doing that?

Richard Lloyd: There is nothing I want to see done that would stop genuine, opted-into direct marketing calls either. I think there is an issue here.

Q8 Mr Bradshaw: My constituents might not want direct marketing, but they might want me ringing up to see if they have any problems that I can help them with.

David Hickson: Do you have their explicit consent to ring them. If you don’t-and one political party found this out to its cost some time ago-technically, your activity in seeking to support them as a political representative could be deemed to be promoting your political interest.

Mr Bradshaw: That is absurd. That is an affront to democracy

David Hickson: Thereby you could be deemed to be direct marketing.

Q9 Mr Bradshaw: That is an affront to democracy. I am their representative.

David Hickson: It is essentially.

Mr Bradshaw: I am there to help them. I am trying to help them and you are saying you want to make it more difficult for me to help them.

David Hickson: So did Nick Clegg believe that when he mass called an awful lot of people to find out what was happening, but he got pulled up because that was deemed to be direct marketing.

Q10 Mr Bradshaw: We have to be very careful that what you want to happen does not stop me helping my constituents.

David Hickson: Absolutely right. You are absolutely right.

Richard Lloyd: I think there are other examples, including legitimate market research-not for marketing purposes but legitimate market research-which we would not want to see killed off by clumsy regulation either. I am sure people are delighted to hear from you, Ben. I doubt that many people hang up or talk back to you in French or something similar.

Mr Bradshaw: Never. Almost never.

Richard Lloyd: But there is a very real and bulk of a problem here that I think it is possible to define and deal with by means of carefully crafted measures and existing regulation and regulatory action, without harming your ability to communicate with your constituents, which is-

David Hickson: Of course, the PPI claims company would mount exactly the same defence that you are mounting-they are trying to help people.

Chair: For the purposes of this morning’s session, calls from Ben Bradshaw are outside the scope of this discussion.

Q11 Paul Farrelly: John, just on this point, you may hear from Ben all the time in Exeter and you may hear from some of us only at election time, but Ben raises a very valid point because we increasingly do telephone canvassing and again that would be a-

Claire Milne: There is a TPS list .

Paul Farrelly: Again, the implications of anything would need to be considered very carefully.

Richard Lloyd: I completely agree and I think there are ways of carving out legitimate purposes, for example legitimate political campaign purposes. However, in the complaints that we have been getting I have never heard a complaint about your spam calls or texts or your unsolicited calls or texts. It has always been about claims management companies or large businesses. It is plainly about sales.

Claire Milne: Presumably, both you gentlemen would be concerned about the growing phenomenon of people withholding all their phone numbers from telephone directories, which is one of the early reactions to being fed up with telemarketing calls. We now have figures-I forget exactly what it is-that something like two-thirds of residential numbers no longer appear in telephone directories. We do not know exactly why, but this must surely be a big part of the reason.

Q12 Chair: A lot of us probably do not list our numbers in telephone directories. I have received probably 10 calls asking me whether I want to pursue a claim for mis-selling of PPI in the last three or four weeks. I am no different to most of the population. How did they know my number? I have never bought PPI so it is not possible for me to make a claim even if I wanted to do so.

Richard Lloyd: I am registered with the Telephone Preference Service and I have not responded to texts on PPI for years, but-

Q13 Chair: Are they randomly selected? Do they have my number as a potential claimant or do they pluck the numbers out of the air?

Richard Lloyd: It depends on the business, but what is behind this is the sale and trading of your personal data. When you register your data, perhaps online with an insurance company, or you enter into any legitimate transaction, and unwittingly or otherwise in the past you have given consent for your data to be passed on to trusted third parties or to others from whom you may have an interest in hearing, that has opened the floodgates to your personal data being traded and traded and traded and passed on to firms that may be much less scrupulous about the use of your personal data than the firm or the organisation with which you originally did your business.

The big problem we have is that even when people have registered with the Telephone Preference Service to opt out of receiving marketing calls, having given that consent earlier, there is a vagueness about the regulation of that that permits companies to use the data in a way that you did not agree to in the first place. That is at the heart of what we think needs to be done about this. There is a huge and growing market in personal data.

Q14 Angie Bray: Do you take a view on the fact that it now appears that local authorities are happily selling off information from their electoral register? That seems to be another way in which people are getting hold of numbers, even if you have gone ex-directory. Do you have a view on that?

Richard Lloyd: My understanding is that telephone numbers do not necessarily have to be on the electoral register. For the purposes of deterring nuisance calls-I may be wrong, but that is what I think-you do not have to put your phone number into the electoral register, so it is about addresses and spam mail. I think any organisation, public or private, ought to be looking very hard at what it is doing to comply with the regulations on the use of personal data and ensuring that if they are gathering your phone number for legitimate reasons, perhaps as a local authority where you are buying parking permits or whatever, they are confident that every local authority is not selling on those data. I do not have that confidence at the moment, and again this is the loophole behind the trade in data.

Q15 Conor Burns: I want to go back, if I may, to the question that Ben put to you. How do you ensure that in seeking legitimate regulation you do not choke off the relationship between legitimate people and their electorate? For example, when I was a candidate I would very strictly adhere to the signs on people’s front doors "no cold callers" and "no canvassing". I now, as a Member of Parliament, ignore those signs because I think as a Member of Parliament I should have the right to knock on a door and say, "I am your Member of Parliament. How are things?" No one who has had one of those signs up, since I have been a Member of Parliament, has objected to me knocking on the door. Likewise with Ben, no one has objected to my ringing up and saying, "I am your Member of Parliament and I am just wondering if there are any issues." There is a critical difference between elected Members of Parliament and councillors and political parties, who already have to conform with TPS. How do you make sure that vexatious people do not accuse people like us of breaking rules that were intended to protect them from vexatious people, not from Members of Parliament?

Richard Lloyd: I think this needs to be about a carefully focused attack on the problem as we try to define it. This is not about legitimate contact between elected representatives and their constituents. This is about firms often breaking the existing regulations for the purposes of sales calls or sales texts. I think it would be really unfortunate and just wrong if there was not a carve-out for those legitimate purposes, because that would not be attacking the problem.

That is why at Which? we are not in favour of a complete ban on cold calling because there are legitimate reasons for people to be contacted, for example for market research or to hear from their MP. We do need to be careful about ensuring that any measures that are applied to this are attacking the problem that people have complained to us about, which is unsolicited calls and texts for the purposes of marketing, or indeed for fraud, but I think that is dealt with elsewhere.

David Hickson: Can I make a point, which is from the proposal that we suggested about the way to move forward on this? This very much comes to the point you make. The problem with using the Privacy and Electronic Communications Regulations as the sole means of dealing with this is that they are very general and very wide. They are based on certain generalised definitions of activity that require interpretation. They also require the use of the powers of the Information Commissioner’s Office, which are not that great for all sorts of purposes. It cannot, for example, put anybody out of business as a penalty so it cannot be that severe. Also, the resources available to the Information Commissioner are not great. Furthermore, the Information Commissioner is not truly a regulator in the sense in which we now understand the word because it is not truly engaged with businesses conducting the activity that it is trying to control.

Our proposal is that we recognise that what has been done by the Information Commissioner has not been successful. It is a gross failure, we could say. What we need to do at this time is turn attention to those who have regulatory control over the industries that are making calls where we feel it is not appropriate. Even in the PECR it appears to all come under the same category, but there is a very great difference between what a Member of Parliament, or indeed a prospective candidate opposing them, may do in terms of contacting people and what somebody who is trying to market the PPI service may do. Yes, both are trying to help, or so they would claim, but we need to look at those two activities in a quite different way from a regulatory point of view.

Only the sectoral regulator-in the case of the claims management companies, this is under the control of the Ministry of Justice-can say, "Is this a proper means of contacting people? Is it not?" I can’t make that determination, but the Ministry of Justice and the Claims Management Regulator can make that determination. As regulators, they are in a much more powerful position to take action if they say, for example, "No direct marketing to get leads for claims management". If that were to be their determination, they would be in a much stronger position to enforce that. They could remove the licences from people who were using leads generated in that way. That would be a much more effective way of getting on top of the problem.

Whatever we may do about rules on consent, powers for the ICO, greater ability to impose penalties and smoother procedures may well help, and I would not be against them, but I do not see their having a dramatic effect on this major problem, which is driving people to absolute despair.

Q16 Conor Burns: Would that form of sectoral regulation stop the increasing trend of some of these calls being generated from outside the jurisdiction of the UK?

David Hickson: The whole point is that this regulation would be over not necessarily the people making the calls but the people using the information. With claims management, these are UK-based claims management companies-they have to be-but their leads are generated offshore. If we can say that leads generated by telemarketing are not an appropriate way of following up business, it does not matter where the calls are made. We have cut the thing off at the source so there is no money in the system to make the people do this from overseas. We will never get the people overseas. All we can hope to do to stop the overseas side of things is cut off the money that is funding it.

Q17 Angie Bray: I will put this question to all three of you. How well do you think TPS is working in an increasingly difficult set of circumstances? Richard, do you want to start?

Richard Lloyd: I am afraid it is not doing the job it is designed to do, and there are two main reasons.

Q18 Angie Bray: Is that because it is simply too big now?

Richard Lloyd: For two main reasons. One is that people-they have told us this at Which? in very large numbers-assume that registering with the TPS is not going to deal with the problem. We have always advised people, "Do it. It may not cut the problem off completely, but it may reduce the number of calls that you get." There is an awareness now, assuming you know about the TPS in the first place, that it is not going to stop the problem, so it is seen as ineffectual. Why? It is because the regulators have not used the data that the TPS has generated to take adequate enforcement action to deter firms from using people’s numbers even if they have registered with the TPS. Secondly, there is this confusion about when your registration with the TPS applies. Businesses have been arguing, "You have given permission to us as a third party to contact you, therefore your registration with the TPS is not applicable".

Q19 Angie Bray: Is that when they may have inadvertently ticked a box somewhere?

Richard Lloyd: It is. The truth is that your registration with the TPS does override, does trump third-party marketing, but businesses have been playing on that confusion about when the TPS applies. People have told us that that is what firms have been saying to them on live calls, "Oh, you have ticked a box, therefore your TPS registration doesn’t apply". So there is confusion about what the TPS is there to do. There is not sufficient awareness of it. But really importantly, the information that the TPS generates when people do go back and complain, "I am registered with the TPS and I am still getting calls", has not been acted on adequately by regulators, so the whole thing looks rather toothless.

Claire Milne: In addition, there is a very important point that a lot of the time you do not have the number of the caller. This is something that is now, rather belatedly, being followed up, but there is no way that the TPS can do anything, or for that matter Ofcom or the ICO can do anything, unless they have some notion of who the caller is.

Angie Bray: Presumably if it is an international call, which so many of them are, they actually can’t anyway.

Claire Milne: Exactly.

Q20 Angie Bray: So apart from that, the issue is clarifying what the law actually says and also enforcing it?

Richard Lloyd: Yes. The TPS is nothing more than a list of phone numbers, and firms are supposed to screen their direct marketing calls against it. If they are not keeping their TPS register up to date, if they are not screening regularly enough, if they are simply flouting it, unless the TPS is enforced, it is simply a list.

Claire Milne: You will be talking to them later on, I understand, so they will be a much better source than we are.

David Hickson: I have a historical understanding, which may or may not be correct. The TPS started as a measure introduced by the direct marketing industry to ensure that they were focusing their telemarketing energies on people who were happy to be called. By taking the numbers of people who were not happy to be called, the industry believed it could better focus its own activities. Along came the Privacy and Electronic Communications Directive from the EU that required consent to direct marketing. In some member states the decision was made to hold a register of those who did consent. The UK took the view that consent would be assumed unless people registered with the Telephone Preference Service. That was some years ago. If the proposition were to be put today that consent to receipt of unsolicited direct marketing calls be assumed unless you took the trouble to opt out, it would be laughed away.

Q21 Angie Bray: Would it make any difference if one was to change that? You are saying that it is being overridden anyway.

David Hickson: It is being overridden anyway. If you were to reverse the assumption and start again, who on earth would put in any effort to canvass for a register of people who wanted to be called by anybody. The whole point is this is consent across the board. It is not the very particular consent, the sort of thing many of us would be happy to grant. Many of us would say, "Well, I don’t mind charities, but I do not want people selling me this".

Claire Milne: And MPs, don’t forget them.

David Hickson: Maybe we won’t, but I think that has been discussed. The point is that this is a general consent and this is why I say that just does not make sense. We can’t do things on a general basis any more. I believe we have to focus on rooting out the areas where it is not appropriate by a means that is effective over and above the provisions of the ICO.

Q22 Chair: Can I be absolutely clear. When I order something online and at the end there are little boxes that say, "Would you like to receive further offers?" and, "Can we share your information with chosen preferred suppliers?", if I tick that box, I am basically giving free rein to give my information to anybody?

David Hickson: It would appear so.

Q23 Chair: So that is how they are doing it. By ticking that box, I am removing all rights I have to prevent-

Richard Lloyd: Registering with the TPS is you opting out of receiving direct marketing calls where that data is being shared. It is worse than that because in many standard terms and conditions you are giving permission. For example, with some major banks you are giving permission for your data to be shared. So this issue of for what purpose and for how long your consent is given is absolutely crucial to tackling the problem.

Q24 Angie Bray: Can I ask you about better enforcement? We have had one or two high profile cases. Has that helped and is it possible that we can get more enforcement into the system? Would that help more?

Richard Lloyd: Which? were saying, six months ago, that the enforcement is just not credible, it is not effective, and we called for a task force of the regulators, including the sectoral regulators like the Claims Management Regulator, as David was referring to, to clearly set out what they were going to do to work together to tackle this. There are problems, which they have recognised, about the different thresholds under the different regulatory frameworks they work to before they can take enforcement action. One of our recommendations is to lower the burden of proof required by the ICO in particular, so that it can take enforcement action more easily.

They are now working together more closely. They are not allowed, strictly legally, to share data between the ICO and Ofcom, so there is a problem there. The willingness to take enforcement action is now much greater than it was a year ago and that is why we are starting to see more cases coming through the system. But in my view this has not been a priority for the regulators, nor has there been adequate and close enough work to identify the strategic priorities, for example claims management companies, and to figure out, if the tools they have to take enforcement action are not good enough, what they need to be able to sort this out. I think they are now working together better and we are clearer about the flaws in the toolkit that they have.

Q25 Angie Bray: When you have been able to identify a company and you have the evidence, are you suggesting that they need to be really whacked hard with a large penalty? How big should that penalty be?

Richard Lloyd: I think they do. Part of the problem that the ICO has is that it is required to whack them with a proportionate fine and they then have the problem, as an enforcer using its powers anew, of making that fine stick. There are firms that have been hit with a fine and have not paid yet, I understand. There is a real issue about the credibility of the enforcement action that the ICO is able to take as well as how much evidence it needs to be able to take that action in the first place.

David Hickson: I know it sounds good to hear about regulators working together, but I worry when I hear about regulators working together because what they are doing is covering each other’s back. Sorry, they are slowing down their individual processes. The important thing about a regulator is that it has responsibilities. By getting in close with another regulator, one fears that they may be trying to shuffle this between the two of them and make things a bit dodgy.

Angie Bray: Passing the buck.

David Hickson: We need to call individual regulators to account, saying, "Oh, we have to work with them. We have to work with someone else." They should have clear duties and if they have to try to work together with someone else, given the judicial problems about passing information between them, then I think something is going on. I have seen Ofcom and the ICO work together in the past. To a certain extent, that is positive, but I have also seen things fall through the net and a vendetta against a certain company, with both of them going for the same company, which looks a bit dodgy.

Q26 Angie Bray: You are basically saying that you do not have any faith in the regulators working together to do a proper job?

David Hickson: Regulators have a job to do and they should be called to account individually for what they are doing. If they club together, that makes it that much harder, and I think it is a valid point.

The Information Commissioner has taken a number of actions recently. One of the most notable was against the company that many of us are familiar with from the BBC programme The Call Centre. They disputed this issue of consent throughout the course of the work that was done. That is in the record of the trouble that the ICO had in imposing a penalty. It has now appealed to the Information Tribunal and the tribunal is considering the case at present; it will come to a hearing some time in the weeks to come. I do not know the exact timetable. It may well be that out of that hearing we will learn a lot more about how the the rules on consent are judged legally and we may all learn a little more from how that particular case proceeds about exactly where the law sits on consent. That will be interesting.

We have the absurd situation that someone who was judged, subject to appeal, a law breaker becomes the star of a TV show and is celebrated for what they are doing. Yes, okay, we do celebrate some charming rogues on television, the Information Commissioner was investigating this company before the BBC series was commissioned. It has not just come to light recently.

Q27 Angie Bray: Do you think that should be taken up with the BBC, or has it been taken up?

David Hickson: It has, but it is something for us to reflect on, as a society. We do celebrate these rogues while sitting here now saying something must be done about them. It is an odd thing.

Claire Milne: Could I throw in a few more points? Of course we need better enforcement, but even if we ended up with perfect enforcement of the rules, the problem would not go away. I see David nodding, and I think everybody would agree that some calls that annoy people actually are legal. But we are not going to get perfect enforcement for the simple reason, on top of the things that have already been mentioned, that there is a very large number of companies in this direct marketing game. This is something that the recent research by Ofcom has illustrated very clearly. As you probably know, they have a large panel of people who keep notes over a four-week period of all the calls they receive that they do not want and who they are from. Only a small proportion of the nuisance calls came from a small number of companies, and this has been backed up by evidence from elsewhere too. The regulators are not staffed to go after this enormous long tail of small offenders.

Q28 Tracey Crouch: Can I just follow up on that? You talked about enforcement, but is it not the case that part of the problem is that nobody is willing to take responsibility for these issues in the first place so perhaps the system of regulation itself is not quite right? If I may just demonstrate with an e-mail that I had from a constituent who has been ex-directory for 10 years and started to receive silent calls throughout the day. He spoke to his ISP provider, who said they could not block the silent calls. He spoke to TPS, who confirmed he was registered but that they do not police silent calls and that he needed to speak to Ofcom. He spoke to Ofcom who said that they could not do anything about it and that he would need to change his number, which obviously he was very unwilling to do, which is when he then got in touch with me. Does that not demonstrate that there is a problem with the system of regulation in the first place?

Richard Lloyd: It is complicated. It is fragmented. There are different types of problem under the jurisdiction of different regulators, so I completely agree with Claire and David. We need to see leadership and accountability here. We need to see a Minister-I would suggest a DCMS Minister who is responsible for this area-making sure that all the regulators with their different powers are using them to the maximum and in a co-ordinated way. It is not impossible. They have shown a willingness to start doing this.

I think it would be difficult to completely redesign the regulatory landscape and to start attacking this problem very fast. There is still a long way to go before we have used the regulatory powers and joined up effectively enough, with clear leadership and responsibility, to use what is already on the table in an effective way. But it is a mess, it is complex, and it is partly a mess and complex because the legislative framework and the different regulations that bear on this problem are in some cases very broad. We are talking about data protection, the powers of Ofcom, the ICO and other regulators as well. There is a range of legislation that can be used to bear down on this problem. That is why I think it is too simplistic to say, "Just give it to one regulator". Perhaps give it to one individual based in a regulator to be accountable for ensuring that all those powers are effectively brought to bear, accountable to a single Minister.

Claire Milne: Let us not forget that it is also something that the carriers can help with-the people who actually deliver those phone calls to you. There are technical approaches that can be applied in networks or through gadgets attached to the network that could help in particular circumstances. I think Richard said very early on, and I know David would agree, that we feel it is wrong that individuals should have to go out of their way to get special treatment and particularly to pay for special treatment in order to avoid a nuisance that should not exist in the first place. None the less, these companies do have a role to play in making the options available and making them more easily available and cheaper or free to people who need them.

Chair: That is exactly the issue we are coming on to next with Jim Sheridan. Just before I call Jim, David you wanted to say something.

David Hickson: I wanted very quickly to explain the situation of Tracey’s constituent. If that call, although silent, had been made with a direct marketing purpose and to someone who was registered with the TPS, even though the call was not completed, strictly speaking it would not have been a breach of the Privacy and Electronic Communications Regulations. However, the ICO, from an enforcement point of view, takes a policy decision that says, "Unless the caller declares their direct marketing purpose in the course of the call we cannot treat it as though they had a direct marketing purpose". That raises all sorts of questions, but if it is a silent call they obviously can’t do anything about it because nobody has said anything.

For that reason, the issue of dealing with calls that end in silence was passed over at the time when the Privacy and Electronic Communications Regulations were brought in. Ofcom has what is called the persistent misuse powers, which are a sort of fall-back power for dealing with things that are not caught by any other regulation, which previously was the responsibility of the telephone companies. But then other EU rules said you can’t make telephone companies tell people how to use the telephone. So Ofcom picked up the persistent misuse powers as a fall-back for any bad behaviour using the telephone.

Then somebody realised that nobody was going to do anything about this enormous problem of silent calls and had the brilliant idea, "Why couldn’t Ofcom use these powers that it has to sweep up the problem of silent calls?" The point is those are not powers of regulation because Ofcom cannot impose regulation on a general basis on users of telephone systems. Ofcom is the regulator of the providers of telephone services, not the users. Ofcom tried to do its best, pretending that it has regulatory powers, and it used a statement of policy to lay out what it thought were regulations about silent calls. However, it did so in a proportionate way that has ended up in the absurd situation of Ofcom trying to be proportionate in its regulation, where it effectively tolerates a situation whereby any company can end 3% of the calls they make in silence and be compliant with Ofcom’s suggested guidance. That is why over the last three years Ofcom has had 60,000 complaints about silent calls and has used its powers against not one company. Do we assume it found that every one of the cases it investigated were within the 3% limit? That is for Ofcom to answer.

Chair: They are coming next week. We will ask them.

Q29 Jim Sheridan: Can I go back to the question of data? One of the tabloid newspapers recently ran a headline saying that people’s data was being sold for £5, including telephone numbers and so on. Is there any tangible evidence that that is the case? Do you know of any?

David Hickson: I have not done any work on that. We are pretty sure it happens, and if somebody wanted to follow it I am sure that would not be difficult. It is not something we have done. I do not know if Richard-you are big on the sales.

Richard Lloyd: There is a market for so-called lead generation and there are companies-you can go online and find them very easily-that you can pay to give you warm leads for marketing purposes.

Q30 Jim Sheridan: That is without the person’s permission?

Richard Lloyd: It may be or it may not be, but they do it by using the personal data that you have given at some point in the past. This goes to the question of whether consent was given or not; whether people were clear about giving their consent to be contacted for direct marketing purposes in the past. There is a big and growing market in personal data. It is very easy for a business to commission a company to make cold calls or send e-mails or texts to people and to find out whether they want your services. We think the responsibility of the commissioner of that service to ensure compliance with data protection rules and the PEC Regulations is too weak. So if the ICO, say, wants to go to a company to ensure that, when it has outsourced that lead generation work, it is checking that the generation company is compliant, it is too loose, it is too vague. There is not enough enforcement action-and again this goes back to what David was talking about-to cut off the problem at its source. If firms that are outsourcing that lead generation work were in fear of regulatory action if they themselves were not ensuring more rigorous compliance than is often the case, that would help reduce the number of cold calls that are coming in.

David Hickson: An interesting way of getting to the bottom of this might be to ask the companies who run price comparison and switching websites how they fund their business. It is widely believed that that is how those websites are funded.

Q31 Jim Sheridan: From my own personal experience in a former life when I worked for a living, you would come off night shift, for instance, and half way through your day time or your night time you would get telephone calls from people wanting to sell you insurance and so on. It is even more annoying when you think that companies are getting paid to do that and waking people up in the middle of the night. So we can understand the frustration and the anger. Given all the new technology that is out there just now, is there anything the telecoms companies can do to trace the originators of the calls?

Richard Lloyd: We think there is a lot more that the telecoms companies themselves could do. One is to ensure that there is an easier mechanism for people to report a call, so why can’t I dial, say, #202020 and for that to register with my telecoms provider that I have just had an unwanted call? That would give providers further information on unsolicited calls. There are already handsets out there to screen calls. We have been testing them, and some of them are quite effective. But again, why should I have to buy a £150 handset to screen unsolicited calls? Why can providers not do more? They are starting to talk now about doing more to identify in their networks when very large volumes of calls are generated by businesses that we know through the screening, through the complaints to the TPS, Ofcom and the ICO, may be from firms that make nuisance calls.

So there are things that are being done, but the burden is often on the consumer rather than the provider. Providers should help people to screen out calls, make reporting much easier and get the technology in place. For example, with mobile phones, the technology does exist to have the equivalent of spam filters. So you could have spam text screened out. Why can’t the mobile providers offer that for customers at a very low or no cost, in the same way that e-mail providers do?

Q32 Jim Sheridan: Just on the telecoms companies, what more and what less can they do as well, if I just digress slightly. There is a big problem-and perhaps it comes under the heading of nuisance calls-when emergency services are called out as false alarms. Is there any way the telecoms companies can trace those telephone calls to make sure that emergency services are not overstretched?

David Hickson: One important point to remember is that in the telephone networks-and I know you have BT coming in later and they will probably confirm this-there is the capacity to trace every call. If it is important enough, it will be traced. As I understand it, every call to 999 is automatically logged and traced.

Q33 Chair: Is there a problem with voice over internet protocol? I was told that voice over internet protocol was quite difficult to trace.

David Hickson: I am not an expert. There may well be issues and qualifiers, insofar as it is within the network-and of course VoIP takes it outside. But remember VoIP has to have a portal back into the network again. That may not identify the individual caller but at least you have got somewhere.

Q34 Jim Sheridan: Can you identify the individual number?

David Hickson: That can be done in any case. The capability is there. The question is how ready the telephone companies are, based on the technology they have, to deploy this technology to stop us getting calls that we don’t particularly want at any time of day. I have at times in the past taken advantage-and thanks to BT for this-of having a particular call tracing facility in place whereby if I want the true identity of anybody who called me on the most recent call to be logged, I key in a particular number. I then check with the nuisance call bureau. They say, "Yes, that was logged", and then we are in a position to take further action if we need to. That facility is made available by BT but only on a very selective basis. I am happy to mention that it is available, but BT does have to ration it. What exactly the technical implications are, and why it needs to be rationed in that way and why it could not be switched on for everybody at every time, is something I am sure BT will be able to tell you. If we had this, we could set aside using calling line identification-which is a quite separate thing; there are cases where that does need to be withheld-as a means of tracing nuisance. I am not happy about the idea of using calling line identification, which has other purposes, simply as a means of tracing nuisance callers. It may be helpful in that regard, and I would not dispute that, but if we try to put all the focus on CLI being purely for the purpose of catching nuisance callers, that is going to create all sorts of other difficulties that we might wish to avoid.

Q35 Jim Sheridan: A number of charities depend on cold calling. Has any impact assessment been carried out on the effect any legislation would have on funding for charities?

David Hickson: I know there has been. I am trying to remember. There was some work done a little while ago about the problem because, of course, people who are registered with the TPS cut off charities from calling them unless they have in some way registered with that charity. I am sure some work was done, I can’t remember where, but I am sure that somebody from that sector would be keen to make a point. We need to look at this on a sector-by-sector basis.

Claire Milne: I am very glad you mentioned impact assessment. You have heard the three of us mentioning quite a large number of things that could or should or maybe ought to be done. I am sure, as you go through the other witnesses you are going to hear today and next week, you are going to hear a lot of other things, and what you end up with is a very confused picture. What we don’t have, to the best of my knowledge, is an overall study that looks coolly and objectively, and using the best available evidence, at what the impact of any one of these measures might be, or what they might be in combination. It would be a very good start to do a decent study using all the expertise that is available in the industry scene, where people agree. I am afraid a lot of it is going to be suck it and see, but what we need is enlightened leadership that is going to identify some of these actions that are most likely to have a useful effect-keep watch, see what the effects are, measure what is going on and see if we can get a really useful reduction in the nuisance.

Richard Lloyd: Of course charities have to comply with the Data Protection Act, and it is in no good business’s or charity’s interest to be bombarding people with nuisance calls. That is why some of the measures that have been proposed would be a burden on the good players who are going to comply with it, and would not deal with the miscreants who flout the existing rules. So I think a charity whose management is concerned about their reputation are not going to flout the Data Protection Act; they are not going to bombard people with nuisance calls and texts. The vast majority of this is done by businesses who disregard the existing regulations.

Q36 Paul Farrelly: It is only my two youngest who bother to answer the landline these days because the rest of us just assume every call is a nuisance call. I suppose it is only inertia or vague thoughts of having it for an emergency that we don’t get rid of the landline, I am sure. Lots of people do not get rid of it because they do not realise that they do not need a voice telephone to have broadband. That is something for the telecoms providers in terms of how it affects their business. Thankfully, my mobile has not been affected in 20 years, and I don’t want anyone to affect it after this session, thank you. One of my assistants has just replaced a mobile because of too many spam calls. Claire, you said the problem is on its way to mobiles. What is driving that? Is it the reducing costs of completion, the availability of numbers? What is driving it?

Claire Milne: Yes, reducing costs of completion, I believe. But again, as I said, there are other people, probably in the room right now and certainly those you will talk to in the course of this inquiry, who will be able to give you better and fuller information on that than I can, but beware.

David Hickson: If the reducing number of people who have landlines or who answer them, to note the comments of people in the Committee, bought everything the callers have got to sell to this diminishing number of people, as the list gets shorter, the poor whatsits who are still left answering these calls would get more and more and more. It may well be that when they are not there the callers will give up and they won’t bother to go on to mobiles. I don’t think so; one has to assume, if there is a market there, they will continue calling.

The cost of calling a mobile is not a significant issue. We had this wonderful case of this chap, Lee Beaumont-some of you may have heard about him in the media last week-who got himself an 0871 premium rate number because he was getting fed up with PPI calls in particular. He thought, "Well, that will stop them because they won’t want to call that". In fact, it turned out the other way round. He used this number, put it on these comparison websites, and before too long he was getting loads of calls from PPI companies on this 0871 number. But then realising he made 7 pence a minute on every incoming call, he thought, "Hey, this isn’t such a bad idea". So when these people phoned up, rather than it being a nuisance-he obviously has time to spend chatting to them-he said, "Well, I’ll just chat to them and I’ll make money out of it". It is a lovely story. It is a great story, but obviously it is not the practical answer for most people.

One thing that that does demonstrate is that even the cost of calling an 0871 number, which is far more than the cost of calling a mobile as far as an originator is concerned, does not put these people off calling. I believe that most of their expense is in setting up their operation and in buying the list, paying the £5 to get the list of people to call. I think that is where most of the cost is. I don’t think the cost of making the telephone call, because telephony is now incredibly cheap generally, is a significant issue, so I see no reason why they won’t move on to mobiles.

Chair: I think we probably need to move on to our next session, so we thank all three of you very much.

Examination of Witnesses

Witnesses: John Mitchison, Head of Preference Services, Direct Marketing Association, and George Kidd, Chief Commissioner, Direct Marketing Commission, gave evidence.

Chair: For our next session we are going to look particularly at the Telephone Preference Service, and I would like to welcome John Mitchison, the Head of Preference Services at the Direct Marketing Association, and George Kidd, Chief Commissioner at the Direct Marketing Commission.

Tracey Crouch: I have a very general question to start off with. Can you outline how the Telephone Preference Service system works and what type of calls it applies to, please?

John Mitchison: Certainly. First, thank you for inviting me here today. Before I answer the question, may I say that the TPS accepts that nuisance calls are a huge problem. This is obviously borne out by the number of complaints that we receive. We are not defending in any way the companies that breach the TPS regulations. These are rogue companies that are harming the legitimate industry and generally breaking the law.

The major thing that was mentioned earlier that would help se is to see more enforcement. As well as that, we have a number of other suggestions that were in my submission, which maybe we can come on to later. But to answer your question about how the TPS works, the TPS is a database of telephone numbers. Consumers can register their number, be it a landline or a mobile, through our website or by calling our call centre. Once their telephone number is registered for 28 days it then becomes a legal requirement for any company making outbound sales and marketing calls to screen their lists against the Telephone Preference Service. Companies can access the database of telephone numbers by going to our website, where they can download it. TPS licensees have an access code that allows them to download the file. They can then use that to screen out the numbers from any marketing that they are doing.

If a person registered with TPS wants to make a complaint that they are still receiving unsolicited calls, they can contact us. Normally they do this through the website, but they can also call our contact centre, and if they give us enough information to be able to contact the company concerned, we will get in touch with that company. We will tell them that they have had a complaint made against them. We remind them of their legal responsibilities and ask them why the call was made. In any case, we ask them to add that number to their own "Do not call" list, so that it won’t be called in the future. All the data that we receive from complaints we then pass to the Information Commissioner who use it in their enforcement activities.

Q37 Tracey Crouch: There was a survey published by Which? earlier in the year. That said that 60% of TPS registered customers were not satisfied with the service. The survey found that, while calls do decrease once you have signed up to the register, those who did receive calls were receiving an average of about 10 nuisance calls per month compared to five nuisance calls per month from those that weren’t registered on TPS. So the question is, does TPS actually work?

John Mitchison: Yes, I think that that research says it does work. It clearly said that people received fewer calls after they were registered. I think that there is a smaller group of people in the country that do receive quite a large number of nuisance calls and, even after they have registered and that number of calls has been reduced, it may still be more calls than for people who have found no reason to register on TPS, because there are some people who don’t get many nuisance calls at all.

Q38 Tracey Crouch: I saw that you were sitting in the gallery earlier. You heard the reference that I made to my constituent who received silent calls. He was TPS registered and raised that with you. You said that you don’t police silent calls. You don’t deal with silent calls, you only deal with marketing calls?

John Mitchison: Yes, live sales and marketing calls. The purpose of TPS is to reduce the number of live sales and marketing calls. If somebody signed up with TPS, the chances of them getting a silent call is reduced because silent calls-as was pointed out on <?oasys [cn ?>the previous panel-are generally as a result of a marketing activity. But if somebody gets a silent call then we suggest that they report that to Ofcom which regulates that particular area.

Q39 Tracey Crouch: Finally, there are nuisance calls that you don’t deal with, such as from debt collectors. I believe there is a complaint at the moment against TPS for that. Debt collectors do not fall within your strict definition of marketing, therefore you can get persistent nuisance calls from debt collectors even if you are TPS registered.

John Mitchison: That is true, yes.

Q40 Chair: Can I just clarify, relating to the earlier discussion, should, firstly, Members of Parliament and, secondly, charities check with the TPS before making cold calls?

John Mitchison: Charities certainly should. MPs should if it is part of a campaigning process, I believe. The ICO has issued guidance on this.

Q41 Chair: A lot of the political parties now use telephone canvassing, for instance. Is that something that should be first checked against TPS?

John Mitchison: I am not absolutely certain about where the distinction falls there. I know that if you ask the ICO they-

Q42 Chair: If I ring you up and say, "Will you vote for me?" that is a sort of direct marketing, isn’t it?

John Mitchison: It is, yes. If it was canvassing in that way, yes. If it was as Mr Bradshaw mentioned, phoning up constituents and just asking them how they are doing, I think that that might be interpreted in a slightly different way. But that is my opinion. The absolute say so would come down to the ICO.

Q43 Chair: That has not been tested yet?

John Mitchison: I think the Scottish National Party was brought to book by the ICO for some of its campaigning because it did not use TPS.

Q44 Conor Burns: The Lib Dems have also had the problem. They were also done over for it. I would be very interested if you could find out and come back to us on the question that John has just put to you because I know that, as the Conservative party, we do use TPS and our computer system generates the numbers that we are not allowed to call. I would be very interested to get clarity on the difference between-

John Mitchison: Canvassing and personal calls.

Conor Burns: Yes. In time we become candidates again, and is what we can do as candidates different to what we can do as Members of Parliament? If I ring somebody who is registered with you and say, "Good evening, it is Conor Burns. I am your Member of Parliament. I am just wondering if you have any issues that I can help you with" is that, under your guidelines, a nuisance call or marketing or is it me serving my constituents?

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John Mitchison: I will certainly get an answer for you.

Q45 Chair: In your evidence you said, "Research by the TPS in 2008 showed that it reduced the number of nuisance calls by 54%", but then the evidence showed that the number of complaints had gone through the roof. How do you calculate that you have reduced the number of nuisance calls?

John Mitchison: MORI research that was published in the Brookmead report in 2008 showed that registering with TPS reduced the number of calls by approximately half.

Q46 Chair: Is that still the case? It has been suggested that registering with TPS might put it up.

John Mitchison: I don’t believe that registering with TPS increases the number of calls that somebody gets. The Which? research said that people who register get a lower volume of calls than those who are not registered. We haven’t done any recent research. Our current contract with Ofcom has not allowed us to do the kind of research that we did previously, but I know that Ofcom has commissioned some research into just that subject at the moment.

Q47 Conor Burns: Can I just clarify that? When you say it reduced by 54%, does that mean if I am getting so many calls and I then register I will get 54% fewer or does it mean I am getting 54% fewer than I would if I wasn’t registered on TPS?

John Mitchison: No, the MORI research said that somebody who was registered with TPS got 54% less calls than somebody who was not.

Q48 Conor Burns: Than they were getting before?

John Mitchison: Than somebody who was not registered.

Conor Burns: Oh, I see.

Q49 Tracey Crouch: But that is not what the Which? survey found.

John Mitchison: No, the Which? Survey did not quantify the reduction. It just said that people reported fewer calls after registering with TPS.

Q50 Tracey Crouch: But the Which? survey said that those who are not signed up to TPS get an average of five nuisance calls per month compared to those who are registered with TPS who get an average of 10 calls per month.

John Mitchison: Yes, after they have registered with TPS they may get 10 calls a month, but prior to that they may have been getting 20.

Q51 Tracey Crouch: But if they weren’t registered they are only getting five.

John Mitchison: Yes, but they are asking people who were not registered. If you are not registered with TPS, there may be a good reason why you are not registered and it is because you might not be getting any calls.

Tracey Crouch: You are not getting any nuisance calls for starters.

John Mitchison: So you would not register. But there is a proportion of the population who do get quite a large number of calls, so if they were coming from a starting point of 20 calls a month and then they registered with TPS and that was reduced to 10 calls a month, it is a reduction, but it is still more than those who are not being targeted by telemarketers.

Q52 Conor Burns: I am not registered with TPS and I get none. If I register am I likely to start getting some?

John Mitchison: No.

Chair: I am registered and I get plenty so-

John Mitchison: You see the issue. So if you registered nothing would change, you would continue to get none.

Q53 Angie Bray: The first question I have written down here is how well is the TPS service working? So, moving smartly on, I think you can judge from experiences around this table. I should add that my own partner’s line is TPS registered and he gets a lorry-load of calls every day. I think you heard the evidence given in the previous session. I think the general view is that the TPS system is not working terribly well. Do you want to talk about what the problems are that you are facing and why you think you might be getting this growing number of complaints?

John Mitchison: The problems essentially are caused by what we describe as rogue companies that are ignoring the TPS legislation. Prior to September 2011, the TPS received somewhere between 3,000 and 4,000 complaints a month, and then September 2011 seems to be the turning point. After that point the number of complaints rose quite sharply, peaking to around 10,000 in February of this year but averaging around 7,000 or 8,000 a month. The reason that this has happened essentially is it started off with accident claims. We noticed a huge rise in the number of complaints about accident claims companies and soon after, that was replaced by PPI. The reason why the number of complaints about PPI is so huge is that just about everybody in the country at some point has had a loan, so just about anybody can be targeted for the reclaim of that PPI insurance.

The companies making the calls are rarely the actual people who will be making the claim, so they are lead generation companies. They are middle men, really. They will be making hundreds and hundreds of calls, maybe just from flicking through the phonebook, and as soon as they get somebody they think may have a claim they will sell that on as a sales lead to somebody who will take it a bit further. So those companies, because of the nature of the call they are making, do not have to give away too much information. They might withhold their telephone number from somebody’s caller display and they might use a very generic name, or they might withhold their name altogether until they know that they have some kind of sale.

Q54 Angie Bray: It sounds as if what is happening is that TPS is in many ways outdated now and we have technology that can get around the rules with the electrical stuff and prevent your caller display being shown-international calls. Also you have a new attitude of rogue companies, as you call them, who simply ignore the rules. Of course they will continue to do that if they can get away with it, which they seem to be able to largely. Would it be fair to say that TPS has been overtaken by events?

John Mitchison: Technology is a big problem, but I think that enforcement would also help an enormous amount.

Q55 Angie Bray: But it seems to me that the problem with enforcement is that you have to provide so much information that the new types of telephone can actually withhold. Without that information, enforcement becomes virtually impossible, doesn’t it?

John Mitchison: That is true, but not all of the calls are unidentifiable. A large portion of the TPS complaints that we get could be followed up by the ICO and they could issue fines against those companies.

Q56 Angie Bray: So there is more that could be done, even now, that is not being done?

John Mitchison: Absolutely. One of the points that I mention in my submission is that of the service providers being able to trace calls. The two key things I think are enforcement from the ICO, which of course could be made easier with some small changes to the legislation, and also the ability for service providers to be able to trace calls much more easily and then pass that information on to the regulators.

George Kidd: I think, perhaps, just to state the obvious-it has come through in the conversation-the register is a mechanism, an instrument, a means to an end. It is not the end. It is not whether the register is effective or ineffective, could do better. It is a very effective way of collecting and recording the preferences of people. The issue then is whether the system is joined up, and whether all the parts of the mosaic work together, and they don’t.

Q57 Angie Bray: Well, that point has been made. The way to enforce will obviously have to be chasing these things through, and it is going to take some work. Is there an issue about funding? Are we saying that whoever the authority is that should be doing this needs a great deal more resource put behind it?

George Kidd: I have a view, if I may, and it is in two or three parts. The first is-John has described it-the extent to which the TPS as a service could, if it had the remit and it had the contract in place with Ofcom, have the resource or retain the resource to do more with consumers, and to do more with those companies that are being complained about. We argue in our submission that they could and that they should.

The second point is that it is very hard when Ofcom, for example, has seen a 25% cut in its budget to say that the issue is money. It is an organisation with a £75 million budget. The ICO is similarly not strapped for cash, but has to be very careful how it deploys its resources. So I suspect the answer is not more resource for the state regulators, because I think the issue with both of those institutions is that they are, properly, strategic regulators. They are dealing with freedom of information, they are dealing with protection of personal data, they are dealing with national issues, and the Ofcom list is almost endless.

Q58 Angie Bray: So it is a change in the law, basically?

George Kidd: Potentially a change of the law, but I think it is more about a partnership solution. I do not think that many state regulators are in the business of churning complaints, and I recall that when Ofcom was set up it said, "This is not the business we are going to be in".

Q59 Angie Bray: What about the other point that we heard earlier about more clarity around where we are with the law now? For instance, a lot of people do not seem to recognise that signing up to your TPS register overrides having ticked a box saying someone can pass on your information. Why is that not more widely known? Why is that not better understood by the public?

John Mitchison: I can’t really answer that question. It is-

Angie Bray: It seems so elementary, does it not, to point that out?

George Kidd: In a very honest way. I have been at presentations at conferences where Christopher Graham, the current commissioner, has said he, like everybody else, when he scrolls down the website, wants to buy the lawnmower, and pay now. He does not want to read the terms and conditions. Do I tick the box? Do I untick the box? I want the lawnmower and I want it now, or I want the CD and I want it now. There is an issue about the process, the transactional process, the handshake, if you like, when you are buying things, because it is not clear. There is good practice in terms of whether you have to untick the box or tick the box. Have you been opted in without your knowing it or opted out unless you choose to opt in? You will notice that the more credible companies that want to have a positive relationship with you will give you the choice to opt in, rather than saying, "We’ve got you until you have opted out".

John Mitchison: I think when people sign up to TPS, they assume that it is going to stop all unsolicited calls, and it should. It is where organisations are a bit clever or a bit crafty about how they gather permissions that they override that, and that creates the confusion in the consumer’s mind about how people get hold of their data.

Q60 Angie Bray: What can you do about these international calls? We get that all the time-"This is international". We almost invariably do not answer because we know it is going to be an unsolicited call. But what can we be doing, having farmed this out to call centres outside the country?

John Mitchison: There are two types of overseas call. If an overseas call is being made on behalf of a UK company, then that UK company is still obliged to comply with the legislation. Some companies intentionally put their call centres overseas in order to make it very difficult for people to identify them and when people complain they say, "We are calling from overseas. We don’t have to comply with TPS." But somebody in the previous panel said if the data that was being used in the UK by those call centres overseas was more strictly controlled, so that people had to show where it had come from, how the permission to call had been gathered and that kind of thing, it would cut off the requirement for that outsourced service.

Q61 Angie Bray: A final question, what sanctions and deterrents do you deploy at the moment and what would you like to be able to deploy? What do you think would make you more effective?

John Mitchison: The TPS has no sanctions of its own. We gather the complaint data from consumers and then we pass that on to the ICO. The ICO has the power to issue fines of up to £500,000 to people who breach the TPS legislation. Obviously, they have started to do that recently. We have seen a number of quite large fines to some companies, but we would obviously like to see a great deal more. It is not enough to just make one or two high-profile cases, although we do think that this has been a deterrent. Since those fines have been issued, we have seen a number of companies sign up to become a TPS licensee that were not before, so it has contributed to better behaviour by certain organisations.

The ICO has a very difficult job when it comes to issuing fines. It has to prove significant damage or distress. It is certainly one of the suggestions in my submission that that should be relaxed to a more reasonable "proving a level of nuisance", which would allow the ICO to issue more fines to more organisations.

Q62 Angie Bray: At the moment, would it just be one person who has evidence? They have identified the caller and it is a UK company. Is it just one person’s complaint that can trigger the whole thing or would you have to be able to prove that a number of people have had the same call from the same company before you could go after them?

John Mitchison: All the complaints that we receive are actioned on, and we try to contact-

Angie Bray: Even an individual complaint?

John Mitchison: Even an individual complaint is actioned on. But when it comes to the actual enforcement done by the ICO, I don’t think that one complaint is enough. In order to prove significant damage or distress, they need to have more than one call.

Q63 Angie Bray: How many would that need to be? What would make a case?

John Mitchison: The recent cases that they have brought against certain companies have been in the thousands of complaints.

George Kidd: That was covered in part in our evidence. One of the benefits, we argue, of something of a voluntary or a co-regulatory nature that the Direct Marketing Commission does in respect of DMA members is to respond to that one complaint. We had a case recently where the company was probably making three or four million calls a year, in the lead generation business, themselves having been passed on as a trusted third party, and they would then pass on to a trusted third party. There were two points. One is your earlier remark about the understanding of the legislation and that very specific thing, not the consumer point, about trusted third parties will not do. If you are calling on behalf of Kellogg’s and I agree that Kellogg’s can call me, that is fine. But you can’t say, "Can any of my chums call you after I have made this call?" So they were in that business, in that position. By the end of it we had five or 10 complaints, but we spoke to the company and because they were a member and they were co-operating, they would talk about the volume of their activity, they would talk about the sourcing of data, they would talk about their client relationship. They talked about what they did or did not do in terms of using TPS. They authorised us to have their TPS data, which we can’t have unless somebody agrees, and we had in the end, at the TPS level, over 1,000 complaints.

It only took the one, in that case, for a regulator in a dedicated space to start to engage and start to unwrap it and say, "What should we be doing here?" and I think that is the challenge. When you go to a statutory regulator of a strategic nature with a finite resource and other responsibilities, they just can’t do that, so they have to look and say, "Is 1,000 enough, is 2,000 enough? Is it the nature of the product? Is it the frequency of the incident? Is it the character of the complainant?"

Q64 Philip Davies: Can I get down to what I consider to be the nub of the matter? Mr Kidd, I think you used to work in the Foreign Office and other parts of the civil service and, if you don’t mind me saying so, your answers would do them proud, talking about partnership solutions and all this kind of stuff. What I would like to get to the bottom of is this. You sense people’s frustration; our constituents are frustrated. There is clearly a problem that needs sorting out. You perhaps sense our frustration that when we take up these issues for our constituents we get passed from pillar to post and never get anywhere, but just keep going around in an ever decreasing circle. What I want to get to is who is to blame for this lack of progress? Is it TPS? Is it Ofcom? Is it the Information Commissioner? Is it the Government? Come on, who should we be holding to book and saying, "It is your fault that this is not being sorted out"? At the moment, I feel that we are going around in these ever decreasing circles today as well, to be perfectly frank.

George Kidd: I am not going to say, "All of the above" and I am not going to say, "None of the above". As somebody who worked on deregulation and better regulation before I left government and who has worked as a regulator, I have a worry about a system that is anchored in statutory regulators with other responsibilities trying to deliver on something that is very consumer-focused. You can decide to have one regulator that does that or a co-regulator, and the Advertising Standards Authority is a very interesting model. It is not perfect, but it is there and it engages with its consumers and its complainants. There are other examples. In the last session, it was suggested that somebody who is specialising in PPI or mattress sales, or whatever, has to step up and do it. I hate to say that it is a partnership, but there is going to be a partnership answer.

I have a problem when it is anchored too deeply in statutory regulators and in statutes, because the regulators, the ICO and Ofcom, can only do that which Parliament has instructed them to do and cannot do that which Parliament has not instructed them to do.

Q65 Philip Davies: So it is the Government? The Government needs to properly legislate and we should be wiping the floor with the Minister when he comes and tell him that he needs to pull his finger out and make sure there is some proper legislation. Is that what you are saying?

George Kidd: I would never wipe the floor with a Minister.

Q66 Chair: Philip would. So the bottom line is that of all the four it is our fault, it is Parliament who-

George Kidd: No-how to win even fewer friends-but I think that it is very easy for legislators to pass legislation; that is what you do. For Ministers to want more legislation; that is what they do. I read the quotes from the current chair of Ofcom, "I have now got more powers to fine £2 million instead of £500,000". If you only do it seven times in five years, the power and the nature of the sanction are secondary to the effect of what you are doing. It is sometimes hard, when it is hardwired, to look at what outcome we are trying to achieve here, which is less nuisance, respect for people’s preferences and choices in terms of what they receive, and then look at how we get there.

Q67 Chair: You will have seen that Which? has produced a list of quite specific recommendations: changing the current burden of proof as to whether or not consent was given; spam filters; a short code for people to report abuses; a requirement to produce caller line ID. All of these sound as if they should at least make a contribution. Would you agree with all of those recommendations?

George Kidd: Of those you have cited, yes.

John Mitchison: Yes. Again, of those that you have just mentioned, yes.

Q68 Chair: Those were the four top ones. An expiry date on third-party consent is another one.

John Mitchison: I think the issue of consent is slightly different. I am not sure of the details of what Which? has proposed on that.

Q69 Chair: But basically you agree that there does need to be action taken, that this is a useful starting point as a list of things that could be done?

John Mitchison: Absolutely, one of the key things being relaxing the way in which the ICO can issue its fines.

Q70 Chair: Approaching this from the other side, if I was somebody wanting to market a product, do I need to register and become a licensee of the TPS, and how costly is it to do so?

John Mitchison: If you wanted to make outbound sales and marketing calls you would need to comply with the TPS legislation. Whether you were a licensee yourself or whether you had your data processed through a third party, that would be up to you. A lot of smaller organisations use the services of a data processor to get their data cleaned, in effect, before they make any calls.

Q71 Chair: Just explain what that means.

John Mitchison: Say they had a database of customers, they had a database of prospects; they might buy external data and put this all together. There are a lot of telephone numbers in there, and they might use the services of a third party data processor who might clean that up for them and use their own TPS licence.

Q72 Chair: But when you say "clean that up", do you mean just check it against your register?

John Mitchison: Yes.

Chair: That is all it is?

John Mitchison: Yes.

Chair: I see.

John Mitchison: Larger organisations that might have their own in-house data processing capabilities might have their own TPS licence and manage it that way.

Q73 Chair: If I want a TPS licence, how much does it cost?

John Mitchison: It is £2,200 a year for a full licence.

Q74 Chair: Does that give me access to your numbers, basically?

John Mitchison: Database, yes. You can access it whenever you like. The file is updated daily.

George Kidd: There was reference earlier and in the last session to fines and sanctions, and I joined in that debate. I think we need to move on from this concept of how big a stick and whether the stick works. There is a question of whether the stick is used enough or whether there are constraints on using the stick. But there are more ways of solving a problem than a large stick, and access to the TPS, the right to become a licensee, the ability to market your competence as a licensee and as a partner-forgive the use of the word-is a lot more powerful as a deterrent, perhaps, than the risk that you may or may not be investigated or may or may not cop a fine. Thinking about the leverage that we can bring to people’s behaviour, it is not just about fines and sticks. It is about access and reputation.

One of the companies, two or three years ago, that was overseas and was in this business of lead generation, was at that time a member of the Direct Marketing Association. We investigated complaints and in the end, they were asked to leave. When the company left there was a lot of comment within the industry about the direct financial impact on them of no longer having that status and that client trust as part of their business model. It did not involve us having or not having the power to impose a fine, but it had an immediate, direct impact on behaviour.

Q75 Chair: You seem to suggest in your evidence that a better system might be a single body of a self-regulatory nature rather than this split responsibility that we have at the moment.

George Kidd: No. If I did, then I apologise. I think what I was testing-I used the advertising example but it happens a lot with self-regulation-is that self-regulation is not actually self-regulation. It is an industry choosing to make sure that those within the industry comply with consumer law and other laws that are in place, and do it proactively in a way in which the OFT or the ICO or Ofcom might not be able to do. The ASA model is that there is law on broadcast advertising, there is law on print advertising and digital advertising, but the ASA is recognised as the established means of delivering the functional, day-to-day operation of regulation and consumer service when there is a complaint about advertising. So if there are 30,000 or 40,000 complaints, they start with the ASA.

That does not put the OFT or Trading Standards out of business. It means that they can channel their resource, which is finite and has different sticks and backup powers, on the rogues that John has talked about, leaving the ASA, or in this case we suggest TPS and ourselves, to channel the behaviour of the people who can be channelled. There are people who are just careless, there are people who do things by accident, there are people who push the envelope, and there are people who are rogues. It is the ability to distinguish and the ability to bring the general behaviour back to a positive place and then to identify and segment the rogues and get after them. It is very difficult for state regulators to do that first task.

Chair: I think that is all we have for you. Thank you very much.

Examination of Witnesses

Witnesses: Warren Buckley, Managing Director, Customer Service, BT, and Hamish MacLeod, Chair, Mobile Broadband Group, gave evidence.

Q76 Chair: Can I welcome, for the final part of this morning’s session, Warren Buckley, the Managing Director of Customer Service at BT, and Hamish MacLeod, Chair of the Mobile Broadband Group. An obvious first question is what are each of you doing in respect of your own bit of the industry to deal with this problem?

Warren Buckley: Thank you very much, firstly, for the opportunity to present to you today. From a BT point of view, we take this matter extremely seriously. We have over 10 million customers with our telephone lines. We want them to feel safe when they are answering the phone call. That is absolutely essential to our business model and therefore, as we have seen this problem rise, we have been looking to build an alliance to deal with this. It may be useful for me to outline a couple of examples, and then potentially we could go into a bit more detail. We think there are three core areas that need to be tackled if we are going to reduce the significant number of nuisance calls.

The first is about informing and educating customers, and this is essential. We have already had a few examples today of people who have perhaps not understood how the Telephone Preference Service works or how they can defend themselves. We run services such as the nuisance call advice line, which is a completely free service where we take calls from our customers and the customers of other communication providers. It is a service that can offer advice such as to register with the TPS, or on how to respond to calls and deal with this. It is an important service, and we take 20,000 to 30,000 calls a month, so it is obviously something that we hope is doing its job.

We have a secondary service called the nuisance call bureau that carries out much more investigative work, working with Ofcom, the ICO and the courts to deal with this in a detailed manner. It has been involved in a number of actions off the back of those investigations. Also, one of the areas that we have been very focused on is trying to help customers to understand the difference between different types of nuisance calls-cold calls or unwanted calls, malicious calls, which still do happen and it is important that we take action on. So there is a whole area around education.

The second area is empowering customers, and this is about what can you do in these circumstances. One of those has been our privacy service that we have been running since 2005, which allows people to add calling line identity to their services and then adds a level of support around that. We are also in the process of upgrading our exchanges at the moment. I am sure we will touch on that. That is important so that if people are calling from overseas, the calling line identification is transmitted all the way through to the phone. We have already touched on why that identification is important. More recently, we have introduced our BT6500 phone, which has been nicknamed the nuisance call, it is worth me saying not because it is a nuisance but because it helps our customers avoid nuisance calls. There are areas, importantly, around how we empower customers to make the right decisions.

Then lastly, from a regulation point of view-we have heard a lot about that today and we absolutely agree that there is an opportunity to tighten regulation, both from an understanding and an enforcement point of view-we have been working closely with Ofcom and the ICO. We also helped to found a forum of communication providers, because we recognise that it is important that the telecoms industry works closely with the relevant regulators. Lastly, we have been trying to speed up action to help protect customers in a number of areas.

So there a number of different areas that we have been looking at, but it is really those three themes of educating customers, empowering our customers to take action, and then working on the wider issues as well.

Hamish MacLeod: Perhaps I will focus on text messaging, as that is a service that is unique to mobile. For a number of years what the mobile operators have been offering is a short code, 7726, which on an alpha-numeric keypad is "spam", where people who receive unwanted text messages can forward them to 7726, where the text can be inspected and-

Q77 Chair: How many people know that that is there?

Hamish MacLeod: At the moment we are getting about 10,000 to 15,000 reports on 7726 per week.

Q78 Chair: Is that run by all the main mobile operators?

Hamish MacLeod: Yes. Just to split it down a little bit more, there is prepay and post-pay, so contract-type issues. With prepay, the spammer does not really make much attempt to make sure they are complying with any law. They just go out and buy some cards, which is quite cheap nowadays, and send off a spam. As soon as the 7726 report comes in for that thing, the SIM card can be disconnected. With the contract situation where we are getting 7726 reports, by and large these are legal, where the appropriate consents have been obtained but, as has been discussed earlier today, these things can still be regarded as a nuisance to customers, so that intelligence can be fed back.

As a particularly recent development, we have introduced something called the GSM Association SRS-spam reporting service. It is probably not much consolation to the British people, but this is a global problem so the mobile industry’s response has been global. What the GSMA SRS is designed to do is a lot more intelligence sharing where the spam is being sent to customers of operator A but being dispatched from a SIM belonging to operator B. The cross-fertilisation of information is improved and we know an awful lot more about what types of texts are being sent. Are they PPI, are they about debt management, are they about payday loans, that sort of thing? The intention is to reduce the intelligence feedback, so you are responding much more quickly, much more comprehensively. As an additional feature, the Information Commissioner has log-in rights to this platform, so they have a very clear idea of what is going on, too. We are starting to see customers reporting calls on the 7726 number as well, not just-

Q79 Chair: Your advice is to forward to the spam number rather than responding with "stop"? A number of these messages often say, "If you do not want to receive any more, send stop". I always think that encourages them to send even more.

Hamish MacLeod: Quite correct.

Chair: So don’t "stop", "spam"? Very good.

Q80 Paul Farrelly: Warren, BT, a great business, great broadband, great entry into sport, but you heard my comments earlier about the landline. I don’t bother picking up because you assume it is a nuisance call. Could I ask you what internal estimates you have made in BT of the revenue contribution of spam calls to your voice telephony business?

Warren Buckley: It is impossible for me to trace that. I think there has been some misunderstanding, so I am glad of the question. Let me try to clarify this. It is not that BT is going out of its way to take on board the businesses that are then making calls in order to make money. Under the basis of the licence that we have, and the wholesale arrangement we have and the regulation, we publish a set of services at, normally, a regulated price in the wholesale environment. Then if somebody comes to us and agrees to the contractual environment and price, we have no choice but to offer them the service. Even if I absolutely knew that this was somebody, not just in the legal side but potentially a rogue, as was described earlier, I do not currently have any environment where I can refuse to offer that service, because it is a straightforward telecom service, and neither can I report on that basis. If I receive complaints from our customers then obviously I can report that through. There is no way I can estimate how the phones have been used.

Q81 Paul Farrelly: I am not accusing you of doing anything. That was not answering the question.

Warren Buckley: No. I understand the question. I genuinely do.

Paul Farrelly: Do you have any internal estimates of-

Warren Buckley: I don’t, because we do not know how the companies and our customers, our corporate sort of customers, business customers, use the services that we supply to them. We do have the ability to track the exact nature of the different calls that are being used. Obviously we will bill them, so we can see from that point of view, but that is the limit that we have to that.

Q82 Paul Farrelly: But you have not made any efforts to estimate the revenue?

Warren Buckley: No, I have not. I can take that away within the business and come back to you on how possible or not possible that is. I am very happy to do that.

Paul Farrelly: I could do it on my phone, but I am just one person with a proportion of calls. You have access to a much larger basket of users who are your customers.

Warren Buckley: I will take it away back in the business. You will appreciate that I need to look at this from, firstly, can we do it, and secondly, the regulatory environment, but I will come back with a clear answer on that.

Q83 Paul Farrelly: Secondly, on the opposite side of the equation, have you made any internal survey estimates of the negative effect on your revenues through people just cancelling their landlines?

Warren Buckley: At the moment, we carefully track our direct customer base in terms of how many people are making calls. What we have seen is-I guess just like the mobile industry-many more people buying essentially a package of calls now. So rather than just paying on an individual call basis, people will buy things like our weekend and evening plan, or even the unlimited plan within that. It means what we have seen of those situations is customers making more calls.

One of the difficulties is that we see a lot of different trends but we absolutely understand, and work closely with Which? in terms of understanding the fact that there are many of our customers who are fearful of answering the telephone because of nuisance calls. That is why we are very committed-as anyone else is here today-to stamping out this problem because we want people to feel safe about using their telephone. It is worth saying that there are still millions of customers who choose to make many calls on their telephone and it is an important part of our business, and we still have many customers who do not have broadband with us or any other ISP. They use their landline; it is an important point of contact, particularly for the more elderly in society, and we want them to feel safe about using their phone.

Q84 Paul Farrelly: I am not detracting from your own personal efforts or those of the team around you in tackling this, but the fact that you are not able to say that BT has made an estimate of the revenue effect positive and negative on the business might lead some commentators to conclude that overall financially it is not a problem for BT because if it was you would have done that analysis.

Warren Buckley: I understand the question. From our point of view, what we have instead focused on is what we believe we can do. As I say, I will come back with an answer on why that has not been an area we have looked at. It is because we do not believe it is an area where we can take action that would have a positive impact in reducing nuisance calls. What we have tried to do is to focus, from our customer base, a technology point of view and a partnership point of view-because unfortunately I think this will take a partnership to solve-on those three areas and more to focus at the moment on the action that we can take.

A really good example is that in the past tracking through international calling line identity was not something that was particularly important; it had not been a need. But in this environment where many nuisance calls are now being made from overseas, we want our consumers to feel confident that they can see who is calling them because that means that they can help to manage consent and it means they can use services such as CLI to decide whether to answer the call or not. Hence, we have now made this decision that over the next 12 months we will upgrade all 5,000 of our exchanges to make sure that we can transmit the identity of anybody who uses the BT network for calls. One of the reasons why that is important is that at the moment it is difficult to know who is withholding and where it has just been an international call. If we make sure that we always transmit the CLI through where it is given to us, either in the UK or overseas, we believe that is a way of empowering customers to make more of a decision. So it has more been about focusing on the actions that we can take.

Q85 Paul Farrelly: I can’t address the same question in such a fashion to you, Mr MacLeod, because it is not a problem that I have found on my mobile, but my brief here-and I assume this is taken from the submission by the Mobile Broadband Group-says the following: "Mobile network operators consider themselves already to be highly incentivised to disrupt unwanted texts, and calls should these become a serious issue. Dealing with unhappy customers imposes significant costs, reputational damage and higher churn to alternative service providers", which clearly has a revenue effect. Why might you be more incentivised than BT to revenue effects in stopping this, or would that be an unfair characterisation of the situation?

Hamish MacLeod: I have not done a comparison with BT, but if this Committee was able to wave the magic wand and get rid of spam text we would be more delighted than anybody. It is a cost to our business. This is why we have invested in the spam reporting services, to up the heat on people who are trying to spam our customers.

Q86 Paul Farrelly: Warren, do you think the mobile operators are more highly incentivised to combat this problem than BT is?

Warren Buckley: I do not believe so. I hope we have demonstrated that over the last few years through a number of the things that we have directly led on making happen, such as the forum, such as the trial that was run with Ofcom, good support from other communication providers as well, the development we have made with our new nuisance calls, a number of different areas and the long history of services such as the nuisance call advice line. This is not something we set up in the last 18 months. It has been around for very many years.

We are absolutely incentivised and one of the reasons we were delighted that you were taking the time to look into this is that we absolutely believe that this is a problem. We believe it is a problem that is affecting our customers and all users of telephony, and genuinely we want customers to feel safe about using their home phone and, in much the same way, their mobile phone. Ultimately we want the telecoms industry to be something that is of benefit to all of our customers, not something that they are hesitant about using.

I do not have the numbers, but nuisance calls at the moment are detrimental to us overall. We want our users, our customers, to feel safe about using their phones.

Q87 Chair: Is it correct-as was suggested in the earlier session-that you can actually identify the origination of every single call?

Warren Buckley: Broadly speaking, if a call is made in the UK we have the ability to trace through the identity. I will come back to IP phones, because I know you did touch on that earlier. If it has been genuinely made, even if the number has been withheld, we have the ability to trace it. The challenge we have at the moment is that we are restricted by regulation when we use those facilities. For example, one of my other responsibilities is the centres that take 999 calls before they are filtered through and handed over to the emergency services. In that situation we do have the right under regulation to trace the call, because sometimes we will receive a 999 call where somebody can’t tell us where they are and we have to trace it to help the emergency service to get there. In that situation we have a ring-fenced department that can help to trace that call down, but that is not a service, for example, that I can use in other situations.

In the nuisance call bureau, if we want to trace a call we would only do so under a court order or if we are working closely with the police and so on. We would need permission to do that. So there is an element where the technology exists but I am restricted in how I can use it. Very rarely would I be asked to use it for unwanted calls. If it was a malicious call, if somebody was being harassed, then the courts may be taking action and I could respond on that basis.

From an IP point of view-and I think this is a challenge that we have going into the future-there is the ability to spoof the number. That is not happening very much at the moment but it is a concern we have and something we are looking at.

Q88 Chair: To spoof the number?

Warren Buckley: Effectively, if I dial from my home telephone and that is the number that displays, if you spoof the number you put a different number in front. So it looks as though I am adhering to the rules that say that I have to be identifiable but I have actually put a different number there. That is something that is not a really big problem at the moment but we worry about into the future.

From an overseas point of view, all overseas operators around the world work to a shared set of standards. The body in the UK, the NICC, is the body that works around the world to make sure those standards are worked to, in a similar way to the GSM Association. For us, one of the challenges is that the networks overseas work to different standards that we can’t necessarily enforce. As we go forward, we will always pass on the CLI, and if we can pass on the CLI we can trace it to the edge of the UK and then bodies such as the NICC or Ofcom can talk to overseas operators. You will appreciate that we do not have the ability to do that. We only run networks in the UK.

Q89 Chair: I am still trying to work out spoofing the number. You can only do it with an IP call then?

Warren Buckley: Technology is always changing. The primary concern we have is around the IP environment, although it may well be that people are doing that on overseas calls as well. That is something that we are going to have keep tackling as technology changes, as is often the way with new technology.

Q90 Conor Burns: But it is a problem that is getting worse and it is a problem that you indicated a moment ago has been going on for years. You said you set up the information line years ago. You say in your written evidence that TPS can sometimes lead to unrealistic consumer expectations. Surely it is perfectly reasonable for a consumer to have an expectation that if they register with a service that says they do not want to receive unwanted marketing calls, they do not get unwanted marketing calls.

Warren Buckley: Yes.

Conor Burns: It was also mentioned earlier that the people who are getting the majority of the calls are those who tend to be at home during the day, elderly people in particular. Most of the people who have contacted me within my own constituency have been from that demographic. Is it not therefore unfair to put so much emphasis on them having to take proactive action by accessing information lines, getting a different number with a different ringtone, setting up the anonymous call reject service? Often these are people who will not necessarily have internet access, and some of them are quite vulnerable. When you look at what you are talking about doing here in setting up the inter-connect group, that just sounds to me like a hell of a lot of activity with not a lot of outcomes, whereas these people are continuing to be bombarded in their homes by very unwelcome and very invasive calls.

Warren Buckley: Yes, we absolutely recognise the issues. Let me try to explain a little point. Broadly speaking, calls fall into one or two categories: those calls that in theory companies can make but the individual has said, "I don’t want to receive those calls", and calls where quite frankly the people making the calls have no regard for whatever the individual has already consented to. One of our concerns around the TPS element is that the TPS can’t help with the many rogue companies that in the UK but particularly overseas are embarking on these activities. Neither TPS, nor to some extent we, have any control over that element of it and therefore the focus we have given in that situation is on trying to empower customers to take action. I entirely agree with you that it would be ideal if we could just cut off the calls, but we do not know which those calls are.

Q91 Conor Burns: Going back to the Chair’s previous question, you do have the ability in limited circumstances to find out the origin of all calls.

Warren Buckley: Yes.

Conor Burns: What conversations have you had to extending your power of investigation to much more proactively target these people?

Warren Buckley: I think it is a really good question. We believe it is absolutely vital, firstly, to require companies to identify themselves and, secondly, to improve the ability to trace those companies, so that we can track back and identify companies that are trying to do the right thing but are not and are making unwanted calls and also rogue companies.

One aspect of that is making sure that we always transmit through the international call if it comes from overseas. That is one activity we are undertaking; we are upgrading all of our exchanges. The second activity is that we have been working particularly with Ofcom, the ICO and a number of communication providers on running a trial on tracing of calls. We identified 255 complaints that had come in from our customers who said, "Actually, this is a call I should not have received". We then looked to trace that within the rules that we have today. Under our rules, we could legally trace only two of those calls through. We then worked with Ofcom and the relevant authority and they were able to track through 54 of those calls. Our concern is that as we go forward we need to be able to get it up towards the 255 number.

These kinds of trials are starting to identify where we have problems tracing calls and where we do not. So we are not just waiting for the regulatory environment to change. What we are doing is working with the people who do have this power, such as Ofcom, to see what we can do in terms of tracing those calls and then finding the barriers to us achieving that 100%.

Q92 Conor Burns: But the 190 that you could not trace for whatever reason, had those been calls into a 999 centre you would have been able to trace them?

Warren Buckley: If they were within the UK then in theory, yes, I would have been able to trace those calls.

Q93 Conor Burns: Can I ask you again the question I asked a second ago? What conversations have you had with Ofcom and others about the ability, the right, the power, to extend your ability to trace nuisance calls and nuisance companies?

Warren Buckley: We ran the trial so that we could understand the conversation we needed to have about what we needed to change. One of the challenges here is that, to be honest, there has not been enough good objective information to understand specifically what we can change. So by running the trial we are having a conversation with Ofcom about what we could do differently in terms of that tracing.

Q94 Conor Burns: What is your request to Ofcom?

Warren Buckley: The recommendation that we have made as an industry is that there should be a single body that has the authority to trace calls through, that we should have a role as a communications provider in making it as easy as possible for our customers to make a complaint, for us to take all of the information we have to a single body with the ability to then trace that call through. Our recommendation at the moment is that that would be something that would sit within Ofcom because one of the challenges we have at the moment is that we need to be able to trace across communication providers. If 255 people have made a complaint to us and 200 have made a complaint to Sky, it is very difficult to see that at the individual level. We could look to liaise, but we think the easier model, the better model, would be to have a single body in Ofcom that could trace through those calls that we placed with them with.

Q95 Conor Burns: The final question that may help us when Ofcom comes to talk to us is what has been their response to you on that recommendation?

Warren Buckley: It is an ongoing conversation.

Q96 Conor Burns: How long has it been ongoing? You said you set up the advice centre several years ago, and the problem is probably getting worse.

Warren Buckley: We have only run the trial over the last few months, so it is very recent. It is worth my just clarifying that although we have been running the nuisance call service for many years, obviously the problem has changed over time. Many years ago, it was much more of a problem of people receiving unwanted calls from people they knew-ex-husbands, ex-wives, ex-girlfriends, and so on. That has now become much more this kind of marketing call, nuisance call type of environment, rather than the original problem it was set up for. We have continued to grow it to support it.

Q97 Paul Farrelly: We have seen from a previous investigation how the Information Commissioner’s Office did not feel it had the resources to take on Fleet Street in pursuing prosecutions on various illegal information-gathering practices. So what is your general impression of how far this activity, from sellers of double-glazing to sellers of PPI claims, often overseas, is up the ICO’s list of priorities, given the resources it has, to pursue it with any vigour?

Warren Buckley: What we have seen over the last year in particular is a significant increase in the priority that both the ICO and Ofcom have given to this. The seniority of the person I have the conversation with is always an indicator of priority. We have also seen both the ICO and Ofcom put genuinely more resource into this issue over the last 12 months and that has enabled us to run some of the trials and to roll out the forum that I refer to in the evidence as well. All of these have come because all of us have started to put more resource into this issue. So I do not think the problem is a lack of priority right now. I genuinely think this is a complex problem that at the moment requires a number of different bodies to work together. We have said that we believe it would be easier if there was one body. We have two pieces of regulation and two regulators at the moment who are absolutely co-operating, but we think that we can bring a greater focus, but I do not think this is a problem of lack of priority.

Q98 Paul Farrelly: Do you share that assessment?

Hamish MacLeod: We have worked closely with the ICO on a few successful prosecutions, where they have gone and kicked down doors and managed to bring some fines successfully, so I think we have a very healthy working relationship with the ICO on this. We would always like them to have more resources. I think they have a very difficult job and a very broad remit, and I think as physical crime decreases and online and electronic crime increases-and the Government already said it-they do need to be shifting the proportion of resources that go to this type of activity. They treat it with adequate priority, but obviously we would like to see more. They have also suggested to us that the threshold of the evidence they have to reach in order to bring a successful prosecution should be lowered, and I think that is worth supporting.

Q99 Paul Farrelly: We can ask them directly. Can I ask the same question in relation to another aspect of this that came out of the first evidence session, which is the practice of companies selling on telephone numbers? As you go along the chain, the chain becomes less reputable, and I think price comparison websites were singled out as a potential source of abuse. How high up the list of priorities has it been for the ICO, in your estimation, to pursue these practices?

Warren Buckley: It is a slightly difficult question to answer in the sense that I have not been directly involved in those conversations with the ICO about who they might pursue. I agree with Hamish that at the moment the fact that you have to prove significant distress or harm is so subjective that the ICO feel they need to almost prove it more than we might.

Q100 Paul Farrelly: This aspect, the trading of personal data is germane to the entire function.

Warren Buckley: It absolutely is one of the things in this environment, and I talked earlier about informing and educating customers. I do think customers need to feel that if they have followed the advice that they have been given, particularly around TPS or ticking boxes, assuming it is UK-based-rogue is a separate issue, but legitimate from that point of view- they can feel confident. I feel that where that is not the case, action should be taken and we would support that.

Q101 Chair: Can I put to you some very specific proposals that are contained in the Which? recommendations? I think there are two for BT. Firstly, you refer to caller line identification, but can you make sure that every company does display a caller identification when they make these calls, or would that require legislation?

Warren Buckley: I think that would require legislation. At the moment, we always make that available so everything that we sell comes with the CLI and we would expect people to use that. But the challenge that we have is when we say that-

Q102 Chair: You could choose not to use it, could you?

Warren Buckley: When we sell a service for people to make calls across our network, we do not know what they are going to use it for. So unless we are asked by the relevant authorities to investigate that further, we do not know. We sell a service that includes call line identity-and that is the default-when we sell it from a business environment, but people can then use the equipment they have, so not in our network at all but the equipment they have-and diallers were referred to earlier-to restrict those. The legislation is very clear on this, that if you are embarking on those kind of calls, you should always transmit your CLI. Therefore, we believe that what I talked about earlier in terms of the ability to trace calls through and work with somebody like Ofcom in order to do that and then take action, is so important. That is the reason why we have been doing those trials; the legislative requirement on a business is very clear.

Q103 Chair: So you are saying legislation at the moment says you should do it?

Warren Buckley: Yes, the legislation says you have to do it. If you are embarking on marketing calls of this type, you have to transmit your CLI. That is very clear at the moment. The problem is then tracing that back and taking action, which is why we focus on trying to support that.

Q104 Chair: All right. The second recommendation was that there should be-I think rather as Hamish suggested mobiles have already provided-a number you can use to report a spam call if you get one.

Warren Buckley: I think the specific Which? suggestion is that if you receive a call, at the end of that call you can dial something so that that is then recorded. We have looked at that. At the moment, the fixed telecoms networks do not work like that so there is no facility to do that. If I could just switch it on and it made a difference I certainly would, but I do not have the facility to do that. Technically, it is not something we are able to do. I think the other aspect that we do have some concerns around is that there is a whole question then of what you do with the data and who you would hand the data to, what responsibilities we would have for deciding if something was wanted or unwanted.

Q105 Chair: You would be overwhelmed, wouldn’t you?

Warren Buckley: Just the sheer volume of it. From our point of view, clearly we have a responsibility-and this is true of other communication providers-to hold data only that we are required to hold. People are rightly sensitive about how their data is held and therefore we have a responsibility. There is a whole question of what we do with data and how it is held. I think there is also a whole question over how you control somebody choosing not to be dialled by a number that they really should be dialled by. So there are parts of government that are required to call people. There are businesses with-

Chair: It could be Ben Bradshaw.

Warren Buckley: I was not thinking specifically of MPs, but I think more broadly there are bodies that you want to be able to make calls to households. How do I decide if somebody has said what they have said is a call they do not want, if I receive 1,000 of them-I do understand why this would seem a very straightforward solution. There is a technical restriction I have at the moment, but I think there are quite a lot of other questions that, validly, we would need to answer as well.

Q106 Chair: Hamish MacLeod, the specific suggestion for mobile operators with spam filtering.

Hamish MacLeod: Yes. Filtering is obviously quite a dark art in that you have to be very careful not to over-filter. With text messaging, it is a bit different to your internet spam, where you are getting 20 or 30 e-mail spams a day. Although spam text is a big problem, it is nothing like on the scale of e-mail spam. So you need to be careful you are not filtering out a spam text and then you are sending your customer a text message saying, "You have some stuff in your spam folder". That could be just as annoying. If the text has been previously identified as something that is illegal, we can discard that and that will take out an element of it, but texters are alive to that technique so they make small alterations to the spam in order to evade detection. Certainly, one of the aspirations with the spam reporting platform is that we can do the filtering a little bit more intentionally.

Q107 Chair: But if a text is reported to you as being spam, you could ensure that that particular message was not sent out to another 500 phones if it was identical? I take your point about changing a letter or something. But if it were not changed, would you do that?

Hamish MacLeod: We could do that, yes.

Q108 Chair: You could or would?

Hamish MacLeod: Do.

Q109 Chair: Do. Right. Also, just tell me what happens when I forward something to 7726.

Hamish MacLeod: What happens?

Chair: Yes, what happens?

Hamish MacLeod: The mobile operator receives the call. With prepay it is almost certainly going to be an illegal thing and the SIM card is disconnected.

Q110 Chair: The SIM card from which the text originated?

Hamish MacLeod: That is right. With contract, where chances are that it is illegal, then the despatcher will be asked, "Do you have the necessary consents to this?" and all that sort of thing.

Q111 Chair: How many SIM cards are you disconnecting?

Hamish MacLeod: At the moment, it is running about 500 per week.

Chair: 500 a week, all right.

Q112 Paul Farrelly: Warren, can I just give you one final opportunity to plug the latest BT nuisance phone. It is 6500, is it?

Warren Buckley: So it is the BT6500. There is the BT4500 as well, which is the big button version we have just released, because, of course, we do recognise that many of our elderly customers really liked the big button phone. They also wanted the nuisance call facility, so we have now joined those two together.

Q113 Chair: What does it do?

Warren Buckley: Very simply, it allows you to set up your phone to prevent calls that you do not want to receive coming through and you can choose whether to just stop those calls or to direct them to a voicemail platform and if you-

Q114 Chair: How do you know that you do not want to receive it?

Warren Buckley: For example, you can put in, "I do not want any international calls", because although some people do want international calls-they have family abroad-many people do not. No one is ever going to call them other than a nuisance caller, so you could just stop all international calls. You could choose to stop premium rate calls. You could choose to stop numbers that do not have any CLI, so you can just say, "The identification is not coming through. I will stop those". The way in which we are seeing many people using it is creating a list of numbers they do want to receive calls from. For example, they just put in the memory their family, their friends, businesses they deal with, and as long as the phone sees the right telephone number come through, it lets that call through. We also have a facility in there, which I think has been very popular, which allows you to decide the time of day when it accepts calls. One of the problems people have experienced is these calls coming through late at night, waking them up, people who work at night and sleep during the day and so on. So you can set the phone to say, "No, I want all calls to go to the voicemail facility during that time".

We are not suggesting it is the total solution, but we do think it is really important, while we are trying to tackle everything else, that we put into the hands of customers a facility that allows them to filter calls. We have worked hard to make sure also that this phone does not carry a premium to anything else. It is, broadly speaking, the same price as any other DECT phone or telephone that you could be buying, hence why it has been so popular. I would say the fact that it has been so popular is almost an indication of the problem as well.

Paul Farrelly: I shall check it out, Chair. You may have made a sale.

Chair: Thank you both very much.