Culture, Media and Sport CommitteeWritten evidence submitted by the Direct Marketing Commission
Introduction
The Direct Marketing Commission (DMC) welcomes the opportunity to contribute to this inquiry. We are an independent body that oversees the Direct Marketing Association’s Direct Marketing Code of Practice as it applies to the 1,000+ members of the Direct Marketing Association. We aim to ensure companies observe high standards of integrity and trade fairly with their customers and with each other. We do this through the investigation of complaints into members of the Direct Marketing Association, and examination of direct marketing issues and practices. This has included investigations and adjudications in relation to telemarketing in contravention of TPS rules and consumer preferences.
Our Views
We offer the following comments:
1. The Inquiry is timely. Complain numbers have risen dramatically and strategic action is needed.
2. There are compliance issues on occasion with DMA members in relation to the TPS but these are few in number. We believe we address these in a proportionate and effective way.
3. We cannot, however, be indifferent to the issue of misconduct by others. The dramatic growth in complaints of breaches of TPS registration and the related regulations damages public trust in marketing and in self and statutory regulation in this field. If non-compliance is seen as a consequence-free choice there is the real risk that this behaviour becomes the norm, and legitimate businesses end up unable to trade or market responsibly or conclude they might as well join-in with the irresponsible.
4. We welcome the increased action taken by the ICO and reports of an ICO/Ofcom joint initiative. We do not, however, believe these organisations have the capacity, procedures and cultural base to make a profound impact on matters acting alone. We believe an industry-based self or co-regulatory approach is needed as a support.
5. We argue that some form of industry/TPS funded programme of active response to complaints could dramatically reduce the level of complaints and wrongdoing, and allow the statutory bodies to focus their limited resources and unique powers on those whose conduct is wilful and harmful in the extreme. This is the approach in advertising and with content regulation and dispute resolution in the communications sector, where there are legislative duties around misleading advertising and other issues, but where the OFT and Trading Standards teams can look to the ASA, PhonepayPlus, DMC and others to address the vast majority of complaints about alleged wrongdoing and bring those involved back to compliance. This allows the OFT etc to deal with the serious scams with maximum focus.
6. We doubt any culture of non-compliance will be changed by one or two actions designed to “send a message” or one-off fines that may or may not be paid. There is a need to look thoroughly at the complaints and their nature and origins. There is a need to understand why problems explode as they have with services like PPI and personal injury claim solicitation. These seem to have a “boom and bust” characteristic and those involved should be looking at the drivers and the behaviours and tailoring compliance action to reflect this fact.
7. There is a need to engage quickly and consistently with those who are complained about and to challenge their behaviours and operating models. And there is a need to use influence and “soft power” to change the behaviours of those who may be acting in a careless or even reckless way but who are not wilful and who can be “turned-around”. This requires commitment and application over a sustained period. The data on adjudications by the ASA, PhonepayPlus and other self and co-regulators show what is needed and what can be achieved. We do not doubt the good intentions of Ofcom and the ICO but question whether they are willing or able to play this role.
8. We believe it should be possible to empower the TPS to do more by way of complaint investigation. We are a regulatory body already working and adjudicating in this field. We believe the DMC and TPS could work together, in effect using the ASA model, to deal quickly with all complaints, to resolve these and change behaviours where we can and to filter and route the most serious matters to the ICO, Ofcom or others as appropriate.
9. One barrier to this lies, according to Ofcom lawyers, in the terms of section 393(1) of the Communications Act 2003. We are told this prevents Ofcom from authorising the TPS to release complaint data and complainant information to the DMC even in relation only to DMA member companies. In one case our ability to access and take account of what we understand to be over 400 public complaints is likely to have had a serious limiting effect on our ability to reach adjudications. If the will is there we believe the Government has the regulation or de-regulation making powers to sweep aside barriers to consumer protection and a healthy market.
10. We argue an element of industry-based non-statutory regulation is a valuable supplement to the statutory bodies—not an alternative or competitor model. By way of example of what can be achieved, we would point to the fact that three recent DMC adjudications related to providers who together had generated over 1,500 complaints to TPS. In each case we believe our action has and will continue to dramatically reduce complaint levels….perhaps by 90% in one case. The impact would vary case-by-case but this demonstrates the behavioural change that intervention can achieve even without headline-grabbing fines.
11. But the answer will never rest just with regulation—whether statutory, “self” or in combination. Governments and industry have others tools when facing a policy issue. In strategic terms they can tax, spend, educate and empower as well as regulate. There are times when “do nothing” is the least-bad option. This is not one of those times, but there may be scope for more action to educate and empower people as they manage their use of telephony and digital channels and when they face requests for data and rights to share their data.
12. We suggest there is a pressing need for new approaches given the “move to mobile”. Nuisance calls to home-phones are generally seen as more of an issue by volume and more of a frustration by nature than texts or calls to mobile devices. It would wrong to assume this will not change. Calling and texting mobiles has been costly relative to calling landlines. The audience demographic is less clear and there might at times be less of a natural selling link between a consumer and her mobile and a householder and her home and home phone. But the economics of marketing to mobiles are changing. If costs keep falling the cost:return ratios will change exposing mobile users to a far higher volume on unsolicited marketing. The PECR regulations on text marketing offer limited protection.
13. The high levels of fixed line and low levels of mobile registration with TPS may be another encouragement for marketers to move to mobile. This is a legitimate mainstream activity where DMA members have set standards and issued guidance and where self-regulation is there as an aid but where those outside our regime may show the same disregard seen with calls to landline numbers. The question is whether statutory bodies and the TPS regime are ready and able to deal with a quantum shift on these lines?
14. It is impossible to look at the issue of nuisance calls without looking at the issue around the sourcing of data and the permissions people have or have not given for use of their data.
The Direct Market Commission
The complaint numbers over the last financial year showed that members of the Direct Marketing Association work hard to maintain compliance and adhere to the high standards set out by the industry. Out of 266 complaints the Commission Secretariat received 53 consumer complaints and 22 business to business complaints which involved members of the DMA.
Individual complaints are often sign-posting for the DMC. The numbers listed are low relative to other bodies but they point the Commission to issues with broad impact. One case relating to PPI claims management identified a firm making over 12 million calls annually and with hundreds of complaints to the TPS. Another related to a firm making around 300,000 calls each quarter and tied to around 1,000 TPS complaints. Another related to “sugging”—the art of calling to generate “leads” for re-sale in the guise of research. This DMC case tied to a firm with offshore call centres and involved over 100 complaints. It resulted in action to terminate their DMA membership.
In 2012
Our ability to look at complaints in relation to preference service rules, data sourcing rules and rules on honest and fair marketing allows a holistic approach when required. This can be missing when different statutory bodies deal with complaints from their very individual perspectives. Ofcom might, for example, give little attention to misleading marketing or breaches of Ministry of Justice rules on Payment Protection Insurance claim companies as long as Ofcom rules on silent calls and network abuse are not at issue. Recent work on a more collaborative approach to nuisance calls begins to address this but the fact remains that statutory bodies are limited by statute in what they can do and when and how they can do it.
Our Recommendations
The Government should continue to remove barriers and build incentives to statutory bodies working together.
Action should be taken to establish a self-regulatory industry-based body to deal properly and proportionately with all TPS complaints. This need not be a new body—the TPS working with DMC could build on existing capacity and capability.
Thought should be given to new ways of educating the public on sharing data and giving authority for data to be passed on
The Government should consider whether a more enlightened interpretation of the Communications Act 2003 Section 393(1) could allow data to be shared with DMC. If this is not possible the Government should look at the case for a deregulation order to remove this barrier to effective consumer and market protection.
August 2013