UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 636 -i i

House of commons

oral EVIDENCE

TAKEN BEFORE THE

Culture, Media and Sport Committee

Nuisance Calls

Tuesday 10 September 2013

Simon Entwisle and Claudio Pollack

Edward Vaizey MP

Evidence heard in Public Questions 115 - 214

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Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 10 September 2013

Members present:

Mr John Whittingdale (Chair)

Mr Ben Bradshaw

Angie Bray

Conor Burns

Tracey Crouch

Philip Davies

Mr John Leech

Steve Rotheram

Jim Sheridan

________________

Examination of Witnesses

Witnesses: Simon Entwisle, Director of Operations, Information Commissioner’s Office, and Claudio Pollack, Group Director of Content, Consumer and External Affairs Group, Ofcom, gave evidence.

Chair: Good morning. This is the second session of the Committee’s inquiry into nuisance calls. I would like to welcome the first panel: Simon Entwisle, the Director of Operations at the Information Commissioner’s Office; and Claudio Pollack, who is the Consumer Group Director at Ofcom.

Q115 Tracey Crouch: Could you start by giving us a brief overview of the scale of the problem of nuisance calls, as you see it?

Simon Entwisle: Shall I start?

Tracey Crouch: Yes, why not.

Simon Entwisle: It is a significant problem, I think. Research that has been conducted by various consumer groups shows that the vast majority of people in the UK receive nuisance calls and/or usually nuisance texts-texts from organisations when they did not consent to the organisation sending the text-and that people very often had received calls that were automated with messages being left on their answer machines, or calls to them during the day. Our approach to this at the ICO has been stepped up significantly since 2011, when the problem seemed to increase by a significant factor. Last week, John Mitchison from the TPS mentioned that it saw an increase in complaints from people who were registered with the Telephone Preference Service at the back end of 2011, which is around the same time as the ICO was given additional powers and changes to the legislation allowed us to issue monetary penalties against organisations.

Prior to that, the ICO was not treating nuisance calls as a priority area; it was something that was fairly low key. We worked with TPS and we did take action in some cases, but it was because of this increase in complaints from people to the TPS that we ramped this up and made it a priority area for the ICO. As we got evidence of increasing complaints to the TPS and as we got evidence of other concerns around texts, which is something that the TPS does not deal with, we increased the resources that the ICO put into this area and began looking at monetary penalties. It was only around that time that we got the power to issue monetary penalties. The action that we have taken since then has had some effect, but still significantly more nuisance calls are being made than when this problem started to increase in 2011.

This year, as part of prioritising the issue, the ICO implemented an online reporting tool that made it quite simple for people to log a concern about a call or a text that they had received. We reached a peak in terms of the number of people raising concerns with us in March, when we had, I think, 35,000 people using that. That has dropped down significantly since then, and in July and August we are looking at a figure of more like 13,000. That is not necessarily 13,000 different individuals, but it is about 13,000 calls. That is information that we use to identify the worst offenders-the ones who are making the most calls-where we can, because often these callers do not reveal their names. We also use information from the Telephone Preference Service. We use the list of complaints that have been made to it to help us identify these organisations. Our approach now is to look at the organisations where the most complaints are and to engage with them. At the moment, there are more than 60 organisations that we are monitoring because they have had a significant number of complaints about them in either of these reporting tools. If they will not engage and if they do not improve, then that is when we look at issuing a civil monetary penalty against them.

There are some concerns about the current law as it stands and our ability to issue civil monetary penalties. We may come on to it later, so I won’t go into that now, but we believe that the penalties that we have been able to issue this year have contributed to the reduction in the number of complaints to us. That is far from us saying that we think that the problem is sorted. It still remains a high priority for the ICO within our business plan for the next three years and we will continue to do what we can to tackle the problem.

Q116 Chair: When you say a reduction in the number of complaints to you, did you say that that was a reduction of 35,000 to 30,000?

Simon Entwisle: It is 13,000.

Chair: So 35,000 down to 13,000 per month?

Simon Entwisle: Yes, per month. It is difficult to do that as a sort of linear graph because we see spikes and concerns raised with us whenever we issue a monetary penalty. People become more aware of the fact that they can use our form, so it goes up a bit. That 35,000 was just after we had issued a significant monetary penalty, so that does have an impact on it.

Q117 Tracey Crouch: Before I ask your colleague the same question, can you tell me what level of resource you have at the ICO for dealing specifically with nuisance calls?

Simon Entwisle: The ICO’s total budget for data protection in PECR is £15 million. We have an enforcement team with around 50 people in it. A lot of people in the team work in this area, but the dedicated team solely looking at PECR complaints is only six people. We have lawyers who work on finalising the monetary penalties and deal with the appeals that have arisen as a result of the monetary penalties. We have an intelligence hub that helps to gather the information. We have people who work in management information who gather the information from the online reporting tool. There are lots of other people who are involved in this, including myself and the Head of Enforcement, Steve Eckersley, who is with us today, but in terms of a dedicated team, it is just six people when it is fully staffed. So we do not have a massive amount of resources to devote to this. We had to create that team and in order to do that, obviously, we had to divert resources from somewhere else.

Q118 Tracey Crouch: Claudio, how many people does Ofcom have dealing specifically with nuisance calls?

Claudio Pollack: I was going to talk about what we know about the scale of the problem. Can I do that first?

Tracey Crouch: You can. I imagine it is very similar in terms of-

Claudio Pollack: The only thing I wanted to add is that it is quite hard to understand the scale of the problem just from complaints because there is something around the propensity to complain and how that changes over time. We have done market research for a long time, so I wanted to explain where we are with that. I will come back on to resources, because I think that is quite useful. Our area of responsibility is overwhelmingly focused on silent calls and abandoned calls. That is around automatic dialler equipment rather than issues of consent and issues of marketing messages that consumers have opted not to receive. We have conducted research for quite some time, which asks people about recollecting having received an unwanted call over previous months. We found that quite limited because it is quite hard to remember in certain months.

What we did in some research that we published in March, which was quite innovative-it was the first time-was to get 800 consumers to keep a diary over a month. One of the problems with the complaints is that people hang up very quickly, so they were instructed to make sure that they stayed for the duration and recorded as much as they could about that call. We are going to repeat that one-month diary next year so we will get some idea of how the scale is changing. That definitely showed a very significant problem, as 82% of people received some calls. I think on average people were receiving eight calls per month, but a quarter of them were reporting 10 or more over the four weeks, so it is something that is quite important and significant. From complaints, it is clear that the scale and nature of the problem has been changing.

Q119 Tracey Crouch: I am sorry to interrupt you, but of the 82%, how many were on the TPS service?

Claudio Pollack: This piece of research did not look at the effectiveness of the TPS, but I can come on to that because we are doing a separate piece of research specifically around the TPS. The reason this was not designed for that is that in evaluating the effectiveness of TPS, you need two samples, half of which join the TPS during the recording period so that you know what the impact has been a few weeks later, once that is bedded in. Doing a pure cross-sectional analysis does not quite work because the people who are attracted to the TPS are those who have already been more exposed, you would have thought, to calls that they want to opt out of. That is a piece of research that we are just putting into the field now.

Q120 Tracey Crouch: Can you go back to those 800 people you have already asked and ask them if they are on the TPS service or not?

Claudio Pollack: We might have the data on what proportion were on the TPS, so we can write in with it. What that will not do, in and of itself, is tell us how effective the TPS is at limiting or reducing unwanted calls, which is the next piece of research that we are doing. But we might well have that data and we can write into the Committee with the proportion of people from those 800 who were on the TPS.

Q121 Tracey Crouch: The reason why I ask that question is that obviously people who sign up to the TPS often think that they are therefore not going to get these calls. One of the things that is quite clear is there is a lack of clarity about who is responsible for dealing with this issue. I am very intrigued by you saying that your responsibility lies with silent calls, because in the oral evidence session last week, I highlighted a constituent of mine who had been receiving unwanted silent calls. He complained to his ISP, which said that it could not deal with anything. He complained to TPS, with which he was registered, which said it did not police silent calls. He then complained to Ofcom, which said that it could do nothing, and its advice to him was to change his telephone number. Clearly there is a lack of clarity about who is responsible for this issue.

Claudio Pollack: I will try to clarify the areas of responsibility of our two organisations because I think there is clarity in that. I know that there are debates about whether a different institutional make-up might make a difference to effectiveness in this area. That said, I think what we do and what we do not do seems relatively clear, although it is difficult to explain in a complex area. The ICO is the regulator on issues of data and information. We are the regulator essentially of phone networks in this context. In terms of PECR, if you register on the TPS, anyone making a marketing call must strike your number off their calling list, unless you have consented to receive a call from that particular organisation. We are required to maintain that register. That is just to keep the list, and we do that by subcontracting that to the DMA and its subsidiary TPS Ltd.

However, the enforcement and effectiveness of ensuring that callers who have not consented do not receive certain calls fits in with the ICO-that is the delineation. Anything that is about the telephone network at the moment sits with Ofcom, as the regulator of telephone networks, and that is where silent and abandoned calls come in. The problem of silent and abandoned calls became very acute as long ago as 2005. The issue there was these companies were using call centres and automatic dialler equipment that would dial vast banks of numbers, generate calls, and then pass them on to a call centre agent. In trying to reduce their costs-and what drove their costs-call centre agents were not speaking to somebody at a particular time and these diallers were essentially run over-hot. They were generating many more calls than an agent could handle in a marketing call or whatever the context was, and because there was no consequence for them, what would happen was that if you answered the phone call generated by this automatic caller equipment and there was not an agent off the phone to take the call, it would just hang up with silence. In those days, looking at our responsibilities, particularly around vulnerable consumers, people were unaware that this was a technological issue and it was causing quite a lot of anxiety. This is where Ofcom stepped in with its persistent misuse powers, which is about making sure that there are rules in place, and that they are enforced, about responsible use of this equipment so that people are not receiving high volumes of silent and abandoned calls.

Issues of consumers opting to receive certain types of calls or not is around information, privacy and data. That is how our responsibility worked. I think that is reasonably clear. There is still a debate about whether it could be different, but I think we understand that delineation. You can tell from just how long this explanation is that it is a hard one to explain to consumers who are just receiving calls that are a nuisance and that they do not want. That is one of the arguments that comes around the institutional debate.

The key thing-I really need to stress this from Ofcom’s perspective-is that we get a lot of complaints about silent and abandoned calls. They have gone up quite dramatically in recent years. Through that we get accounts, seemingly like the one from your constituent, of people who have done everything they can to empower themselves to deal with this problem, and the only advice that can assist them at that point-something like changing your number-is dramatic and wrong and the world needs to be very different. We exist only to further the interests of citizens and consumers; that is what we do. Therefore, when we see evidence of consumers suffering harm, it becomes a major priority, which is what it is for Ofcom. In the area of consumer protection, which is an area that since I have been at Ofcom has been an enormous area of focus and attention, this is trumping everything else because it is such a complex and at times seemingly intractable problem. That is something that would be useful to explore a little bit: what we have done so far about silent and abandoned calls; what has had an impact; how the nature of the problem across our two areas has changed; and what sorts of solutions need to be explored to eliminate or reduce that harm, which is unacceptable and which we need to resolve between us.

Q122 Tracey Crouch: You said you started to see the problem in 2005 and since then it has increased dramatically, so do you think you are doing a particularly good job? You obviously haven’t dealt with this problem at all and consumers are still completely unclear about what you are doing to tackle the problem.

Claudio Pollack: From the consumer perspective of someone who is sitting at home receiving calls they do not want to get, which are causing distress or inconvenience, there is a job to be done. I would not accept that we have been ineffective for the simple reason that the problem we set out to tackle seems to have changed quite dramatically. The nature of the problem has changed and that is why it needs new solutions. Perhaps I can try to illustrate that somewhat. What we were seeing in 2005 and beyond very often was big brand, big name companies-household names-doing cold call marketing and direct marketing activity. They were using these diallers irresponsibly, but without any consequence, which and they would generate high volumes of silent calls.

What we have done is to introduce essentially a policy about how we interpret our persistent misuse powers, which limits the use of those powers, and we have pursued enforcement actions. There are two points to note on why we think that our approach has been effective on that front. One is that the maximum fine used to be £50,000, but it was raised to £2 million, so we could look at these as two phases. The most recent cases that we have looked at under the new fine limit involved fewer than 15,000 abandoned and silent calls over the relevant period, which from memory I think was 49 days. The cases we were looking at before the new powers, when we had the £50,000 limit, invariably involved over the same sort of period hundreds and hundreds of thousands of calls. From our primary big name targets for this issue of using dialler equipment irresponsibly, we are now chasing something that at that end of the problem feels a lot smaller.

I would add to that that when we look at our complaints, what we are finding as well-this is what I mean when I say the nature of the problem has changed-is that complaints are now coming with hundreds and hundreds of different companies, and when we look at our top 10 or top 20 complaints, there are hardly ever-sometimes never-names of any of these companies that you would recognise. So the problem that we were dealing with looks resolved. There is now a different problem, which is about the nature of the companies making these calls, the number of them and how difficult it is to trace them, identify them, take action and disincentivise that bad practice. That is where our effort has to focus. What we have done, naturally I think as an organisation that focuses on the evidence, is at each stage to analyse the data, do the analysis, focus on the issue causing the problem and the issues we anticipate will cause a problem, and then tackle that. We have seen a very dramatic change and that is a change that involves us looking at what solutions and remedies we have to tackle this new type of harm. That is why it is obviously very welcome that the Committee is paying attention to this, because I think it does need attention.

Q123 Tracey Crouch: The ICO has six people directly working on this issue. How many does Ofcom have?

Claudio Pollack: I do not have the numbers that I can articulate right now in that way. We have a multi-disciplinary team whereby we have a consumer protection team that has a number of individuals that are overwhelmingly focused on this, but because of the complex nature of the problem, we have cross-investigation, and then there are some of the innovative things that we are looking at to deal with problem. We will have quite a lot of technical advisers who each devote a lot of time on this issue, along with economists who are drawn on issue-specific areas, which I can also talk through in terms of what we are trying to do to investigate what it is that has changed and what it is that regulators, policymakers and Government can and should do that would have a game changing effect on the nature and extent of the harm.

Q124 Tracey Crouch: Perhaps you could write to us with some of those specific details but, given the scale of the problem, do you not think that it would be wise to have a dedicated team, rather than your multi-disciplinary team?

Claudio Pollack: I think we need to have a multi-disciplinary team. One of the challenges that I have had in coming to speak to you is that there is a level of technical complexity. If we get into the issue of how difficult it is to find out who is causing the calls that aren’t wanted and how easy it has become for these companies to hide their identity, there is a level of network and technical analysis and engagement with industry that is at a level of detail such that we need to have all the specialists, who are working across a number of areas, drawn in to provide that expertise. On the question of why the phone regulator is involved in something that is around call centres, it is a level of expertise around networks and legislation that means that we have more than a hope of trying to identify what has changed at a network and technical level, and we are looking at solutions that will mean that we can become more effective at disincentivising this bad practice, catching people and making them not do it any more. Also, it means that consumers can become better empowered to choose what calls they want to receive which, as you have seen from the advice to your constituent, is very limited at the moment.

Q125 Chair: Mr Pollack, can I appeal for slightly briefer answers because otherwise we are going to be here for a very long time?

Claudio Pollack: Apologies.

Chair: No, that is quite all right.

Simon Entwisle: May I chip in on something around helping the consumer to navigate through this difficult area to identify where the complaints should be made? One of the things that we have done, working with Ofcom, is synchronised our website. If someone googles "nuisance calls", they are going to get the ICO or Ofcom. They are going to see a page there that will say, "What type of nuisance call was it: silent call, text?" They will click a button and that will take them through to the right place.

We have also worked with Which?-this is another initiative that DCMS has helped us with-for it to introduce a new portal, which again it steers consumers to and again clicks directly through to the right regulator. That does not solve the problem, but it is our effort to try to make it as easy as possible for people to get to the right place. I think it is fair to say that the vast majority of them come to the ICO.

Q126 Angie Bray: A briefing document that we have been sent from the Fair Telecoms Campaign makes the point that, in relation to silent calls, only one company has been subjected to actions using the persistent misuse powers for activity conducted since March 2009. That was the case as of about 10 days ago, but since March 2009, Ofcom has received over 60,000 complaints. That puts it quite well in context, doesn’t it-nothing very much is happening at all, despite your fairly busy answers? In fact, I think the longer your answers were and the more quickly you talked, we got the impression that it was all talk and not a great deal of action.

Claudio Pollack: I will try to speak more slowly.

Angie Bray: Is that a fair perception? Some 60,000 complaints and one case that has just started. What is it all about?

Claudio Pollack: It is factually incorrect. We have fined three companies over £1.5 million since the new fine levels came in-TalkTalk, nPower and HomeServe-two of them for £750,000. It comes back to my earlier answer; again I will try to keep it brief. We are focusing resources to try to understand and pay attention to and deliver in those areas that are most likely to cause a change. We could focus on having more high profile, big fine investigations against large companies that are misusing the dialler equipment in breach of the rules, but they are not the companies being complained about. Therefore, what we need to focus on, and what we are focusing on, is technical solutions as well as the enforcement side of things. That alone will not solve the problem, for the reasons that I have given in terms of where the harm is coming from. We need to focus-and are focusing-an enormous amount of effort and attention into being able to trace these calls so that we can take enforcement action.

I can give you some numbers on that, if numbers are helpful. We want to focus on those causing the most harm and those that are hiding their identity. In a sample of complaints to us-remember that a lot of people who don’t have a number won’t even bother to complain because they have nothing to report-81% of complainants included the telephone number of the caller. In 15% of those, it was obviously a spoof CLI, which is a spoof telephone number-one that does not exist-and isn’t even the right number of digits. For the others, when we called the number we were only able to identify a company name for 24% of complaints. So I do not think I would measure the effort or priority we are giving to this by the number of cases that we are churning out because churning out more cases will not reduce-

Q127 Angie Bray: I suggest the public might well be comforted by seeing some high-profile cases take place, because it at least suggests to them that where you can pin something on somebody there is some kind of penalty inflicted that is painful. If you are saying that those are not necessarily the companies that do most of the damage, they are companies that do some of the damage, and the fact is that you need to set an example.

Claudio Pollack: We have. We think that those fines have acted as a deterrent on others and that is why we have seen a change in the nature of the harm.

Q128 Angie Bray: In some of your evidence at the end here, you admit that enforcement is hampered by difficulties in identifying transgressing companies. We learned last week that that is where the bigger problem lies. One suggestion put to us last week was that one of the ways of increasing enforcement might be to suggest that those companies that benefit from the data that is got from these types of calls should not be allowed to use that data because it had been obtained illegally. Do you think that that would be a helpful way forward? Perhaps Mr Entwisle would like to answer that.

Simon Entwisle: I am not absolutely sure that I understand the question. When you say "illegally"-

Angie Bray: If data is being received from nuisance calls, would it be sensible to say that the companies that are hoping to make use of the information should not be allowed to use that information, or that if they do, they themselves are part of the illegal activity?

Simon Entwisle: I think what we are talking about generally is this whole trade in telephone numbers and personal data, and lead generating companies-is this right?-where they gather the information off a website and then sell this information on in the form of lists.

Q129 Angie Bray: Should companies be forbidden from using that information in order to further their-

Simon Entwisle: At the moment, the Data Protection Act does cover the use of this data-fair processing.

Q130 Angie Bray: I am not sure that it does, does it?

Chair: It is not illegal to buy telephone numbers, is it?

Simon Entwisle: No, it is not illegal. It could be a breach of data protection legislation, but I am afraid it is not necessarily a breach of data protection legislation. It could be completely outlawed, if you like, but at the moment it isn’t necessarily a breach of the legislation.

Q131 Angie Bray: Do you think we should toughen that up?

Simon Entwisle: You may be aware that the data protection law for Europe is being reconsidered by the EU. That is not something that I think it is considering at the moment.

Q132 Angie Bray: Would you call for it to be toughened up, in light of these problems?

Simon Entwisle: I think there is definitely scope for making it easier for us to take action against organisations that are trading personal data in this way. It is a problem for us and it is a problem for the public, because this is how most of your telephone numbers get into the public domain. You collect it on one website, the information is harvested together, notionally with consent, and then sold on to organisations that want to call you. They have a name for it. They use these lists and they call it "warm calling" as opposed to "cold calling". They have a list with your name on it. At the top of the list it will be described as "These are people who have consented to calls being made to them". We are just issuing new guidance on consent at the ICO this week, which is part of the initiatives that we have been doing to try to clarify the law in this area, but there is no doubt that it is potentially a data protection issue. This is something that we are also looking at as a data protection regulator. We have a big operation within the ICO to look at this trade. We are working with lots of other organisations as well to look at exactly how it works and the intervention points-the places where we can put a stop to it or take action-because one element of the Data Protection Act usually has been broken.

It is not a question of if it is illegal at the moment. If it were, I am not sure what the unintended consequences of that would be. One of the things that you might want to consider is that we hear a lot about the effect that this has on consumers, but there is no doubt that marketers make money in this area. They would not be making these nuisance calls or sending these spam texts if, at the end of it, they did not get leads and they were not able to sell their goods, products and services. As a regulator, one of the things that we are obliged to do is to look at the economic impact of actions that we are taking. I am sure you are aware that the Government require regulators to look at the effect on growth that our action is likely to take. When we are looking at changes to the law like that, we need to get a steer from the Government on, "How far do you want to push this and in which direction?" At the one end, you have the consumer who is irritated by these calls and say they are a nuisance, and at the other end you have direct marketers employing lots of people and entrepreneurs wanting to set up businesses and to turn a buck. How far do the Government want us, as regulators, to push? If the Government want to take concerted, sustained action against these organisations, regulators will have to be given more powers.

Q133 Angie Bray: Do you think that it would be helpful to bring this under one regulator-to have a single nuisance calls regulator? Would that help to provide clarity?

Simon Entwisle: I can’t see why that would not help provide clarity to the consumer, but one of the things that strikes us at the ICO is that there is not a simple box you can put this in. We work with the police, the Office of Fair Trading, Trading Standards and lots of other organisations, because this sort of cold calling touches on all sorts of different problems. Sure, to put it all under one regulator would be quite easy-to bring together the two things that we do-but that would still require a huge amount of co-operation between different organisations that are involved in this area.

Q134 Angie Bray: But it would provide one single focus. That is the point, isn’t it?

Simon Entwisle: Yes, it would provide one single focus. At the moment, as our submission outlines, there is a huge tie-in with data protection legislation. When we are talking about generating lists, that is the big tie-in. On the other hand, with Ofcom, there is also a big tie-in with telecoms providers, with tracing calls and with bulk calls, so I do not think there is an easy solution whereby you can say, "Right, just put this bit together with that, and there is one regulator." I think it needs a lot more careful thought than that to come up with a regulator-

Q135 Angie Bray: But at least it would mean one person was pulling the whole thing together who would be accountable. That would be the point too, wouldn’t it? There would be one person sitting here explaining why things were and weren’t working, and it would also provide the public with the idea that there is somebody out there who carries the can.

Simon Entwisle: I can certainly see those arguments.

Q136 Mr Leech: Mr Entwisle, you say that a single regulator would not necessarily help the consumer, but what proportion of complaints to the ICO are complaints that you should not deal with but should be dealt with by Ofcom?

Simon Entwisle: Nowadays it is a very small proportion. If you go on to the ICO website and you have a complaint about a silent call, you will be directed straight to the Ofcom complaint portal instead of our complaints system. If you go on to the Which? portal, a similar thing will happen, so we get very few complaints to the ICO about silent calls, and if we do, we direct them straight to Ofcom.

Just to be clear, I can’t deny that there would be benefits to the consumer, for all the reasons you have said. I am not here to defend the status quo. I am just trying to point out that there is a broad spectrum of issues that go beyond what we two as regulators do. Whatever system is set up, there will still need to be a lot of co-operation with these other organisations. I am talking about people like the OFT and the police. We co-operate with the police. So please don’t think I am here to defend the status quo at the expense of consumers; I am definitely not.

Q137 Mr Leech: What proportion of people would you say do not have access to the internet?

Simon Entwisle: I do not have that figure.

Claudio Pollack: It is about 15%.

Mr Leech: About 15%?

Claudio Pollack: I forget what the exact number is, but internet at home is up to about 85%, I believe. We can write to the Committee on that.

Q138 Mr Leech: Would you accept that the vast majority of people getting these nuisance calls who do not go on to the internet and find out who they should be complaining to would not know who to complain to?

Simon Entwisle: No, they would probably not. They would need to go to the CAB or someone like that. They can make a phone call to us and they would be directed to the right place. But, no, it would be challenging to find out who to complain to without using another adviser like the CAB.

Q139 Mr Leech: Do either of the organisations have any concern that perhaps people do not really know who to complain to, are not checking on the internet, or are not going to a CAB-many of them have closed down over recent years-and so are just living with these nuisance calls on a regular day-to-day basis?

Simon Entwisle: I do not think that it can be denied that there will be some people who are staying silent and yet suffering from receiving nuisance calls, yes.

Q140 Mr Leech: Isn’t it most likely to be the most vulnerable who are doing that-elderly people who are often at home and are likely to be taking far more phone calls, rather than listening to their answering machines?

Simon Entwisle: It is. What we do find-I know this does not apply in every case-is that relatives regularly act on behalf of elderly relatives who have been caused problems in this way. We get a lot of complaints from people acting on their behalf. Similarly, care agencies will help. But you are right: that is definitely an area where some people will not find it easy to contact the regulator. In this modern day, we do expect people-well, we don’t expect, but it is often the case that you are disadvantaged if you don’t have access to the internet in this way.

Claudio Pollack: It is undoubtedly the case that as regulator it is a very high priority for us that people, particularly those in a vulnerable situation, can go somewhere where they can get advice about what the situation is and what they can do.

On the issue of a single regulator, you must understand that it is quite hard for us to go too far into choices around the institutional set-up. I think that you have articulated between you quite well some of the advantages, certainly from a consumer perspective and an accountability perspective, and some of the benefits of having a single regulator. I would add to that that in a situation where the world is changing very rapidly, having a single organisation that is able to look strategically at the issue across the piece can be very helpful.

That said, I need to second what Simon has said that I do not think you should write either of us out, because the nature of the problem is such that it involves the use and misuse of telephone networks, which is our bread and butter, and the use and misuse of personal data to contact people who do not want to be contacted, and that is the ICO’s role. Of course it could be configured in a different way. That way could be beneficial and that is something that could be looked at, but I think it is going to have to keep our respective expertise in there in some shape or form, or flavour. I think it does need to be looked at, but my only concern is that it should not be a distraction because there is a lot that we can be getting on with, independently of the institutional set-up, to look at ways to be more effective at stopping this harm.

Q141 Mr Leech: In the Ofcom market research, when you asked 800 consumers to keep a diary, 82% of them said that they had received an unwanted call, 99% of which were not very useful calls, because only 1% were saying that they found the unsolicited call to be useful, yet you receive only 3,200 complaints a month. Judging by the sheer scale of the people receiving unwanted calls, do you see that as most people not being that bothered about the unwanted calls, or most people simply not complaining about them-or perhaps not knowing who to complain to?

Claudio Pollack: Often it is all of the above, but just to clarify, the market research is about any call that is not wanted. The complaints to Ofcom are particularly about silent and abandoned with message calls, so it is a subset. With any-

Q142 Mr Leech: That suggests that the scale of the problem is even bigger if 82% of people are getting silent calls or nuisance calls, not including other kinds of unsolicited calls as well.

Claudio Pollack: Yes. This is what I meant when I said we can’t rely uniquely on complaints to understand the scale of the problem and that is why we have done the market research. On any issue of consumer harm the complaints will be the tip of the iceberg. The challenge for us is to work out the size of the bit underneath the tip that is visible. In this one, for all the reasons that you give, it is very large. It could be that a lot of people do not know where to go to, and this is something that is quite hard to research, but what we are finding is a low level of harm and irritation across a very large number of people. That is what makes it a very difficult and pernicious problem. I agree with you; it is a big problem that a lot of people are suffering.

Simon Entwisle: I do not disagree that this is the tip of the iceberg, but our focus is on the organisations that are making the calls. Although in terms of volume they may not be truly representative of the number of people that are affected by it, it is a cross-section and gives us a clear indication of the organisations that are causing the problems, even if it is only 20% of the people who are receiving the calls. We go after the organisations that we know about that are causing the problems and, by taking action against them, that helps everyone, whether they have referred a complaint to us or not, by potentially reducing the number of calls to them. If we close down or fine an organisation and get them to behave better, everyone benefits. We do not know the exact number of people who are being affected, but we believe the cross-section is enough to lead us to target the right organisations.

Q143 Mr Leech: Surely the more evidence you get from consumers, the greater the likelihood that you can get the evidence you require to get some sort of conviction against an organisation. My final question to both of you is: what more can you do to empower people to make those complaints to you? For instance, I do not pay much attention to my telephone bill, other than the actual amount that is on it. Does a telephone bill say whether you have received unwanted calls or nuisance calls-contacts? Surely something like that could be done so that BT, TalkTalk and all the other companies that offer phone services should perhaps have something on their bills to show people who they should be complaining to. Have you done anything like that?

Claudio Pollack: We have worked very hard to try to make ourselves more directly accessible to end users wanting to report issues that they have had with unwanted calls, and we will certainly take away and consider other things that we can do. We have done that through the portals, information campaigns and the advice leaflets that we have delivered-that have been downloaded something like 200,000 times, notwithstanding the fact that some people do not have access to the internet-and by working with other organisations that consumers tend to turn to when they have issues of concern. It is so important to specify that we are prioritising those areas that are most likely over time to reduce the harm.

I think it is absolutely and pivotally important, as you say, that people who want to register something that has happened with which they are unhappy are able to do that, and we will continue to work on making it better. However, the obstacle to us identifying who is causing the harm and making sure that the incentives are such that they will stop doing it is not a lack of intelligence from members of the public. We get enough reports from members of the public that we can analyse and go through. The problem is that there are a lot of these companies and they are hiding their identity. That is why our focus has been very much on technical solutions around call tracing so that we can find those that are hiding their identity and tackle them so that that empowerment exists and we can then enforce then against those doing the harm. It is all too easy to hide your identity.

The second focus, which I think is really quite important, is some of the work and thinking that is going on around accreditation, so the ex-post enforcement that we do. We take a few big names-the poster boys-give them a big fine and therefore nobody wants to misbehave because they do not want it to be them. That worked very well with a situation we faced where big brand names that care about reputation were causing most of the harm. It does not work that well when there are hundreds and hundreds of companies that you can’t find that no one has heard of. That is when you need a form of enforcement that comes not ex-post, but before the event-an audit; an accreditation requirement. We are not there, but that is worthy of consideration because more and more enforcement, when you have that sort of make-up with different tensions, isn’t going to be game changing in terms of the nature and the harm. Our focus has been to try to understand that further.

Q144 Steve Rotheram: I think the point that John has just outlined is a real pragmatic solution, or a part solution, to the problem that you are facing. Everybody who is getting nuisance calls de facto has a telephone, so they will be getting a telephone bill. Why don’t you just simply put on the bill that if they are receiving nuisance calls, they are to contact a certain number? It didn’t seem that you took that on board, but I think it is a good solution.

Claudio Pollack: We will take that away for consideration. It is a solution we have used in other areas. For example, a priority area for us is about people’s right to complain and their right to go to the ombudsman where they are not satisfied with their complaint. We do have regulations in place that require the name and contact detail of the respective ombudsman to appear on the bill, so it is a solution that we have experience of. We have not evaluated it being applied to this issue, but it is one that we will do.

Q145 Philip Davies: To be perfectly frank, I have heard a lot of huffing and puffing-not just this morning but last week as well-about, "We’re doing this. We’re doing that. We’re doing the other". My contention is that that is no good. What you are doing clearly is not working because if it was working, we would not be in this situation today where we are having an inquiry about it. I would be keen to know not what you are doing, because palpably that is not working, but a bit more about what you are going to do that you have not been doing, and why you have been failing so miserably in this area. That is what I would like to know more about, rather than this self-justification that is not getting us anywhere at all.

Simon Entwisle: I will start. I am not sure we have been failing miserably. It is fair to say we have not been successful. We have had the power to levy fines for nearly two years now, and we have levied a limited number of fines. We have found all sorts of problems with issuing those fines because of the level of harm that we have to show in order to do one. We have put in a suggestion to the DCMS that the law could be changed in this area to make it easier to fine people.

If we really want to put a stop to this problem, I think that there would need to be a concerted initiative across the board on all sorts of different fronts to stamp it out, and that would go far beyond regulation. The law could be changed to give us the power to fine on the spot-£50 every time someone sent a text or made a nuisance call. Draconian regulatory powers could be given to us and we could do that. You could look at the suggestion, which I think Ben Bradshaw made last week, to put some onus on consumers to do a bit more, unpalatable as that is, to screen calls, such as by using their answering machines. You could increase the powers of organisations easily to trace calls that have been made. They are all draconian measures that would have consequences. If you took all those steps, you might just be able to reduce this to a 20th of what you have at the moment.

If we were to get the powers that we are looking for-the ability to fine organisations because of the nuisance value of the calls that they make-I would suspect that that would reduce the number of calls. Even if we got at everyone, and even if we fine them all and stop them from doing it, I think that would at best only halve the number of calls that are being made in this area. The reason I say that is because around half the calls-this is our analysis of the complaints made to the Telephone Preference Service-are made from 800 different organisations in one given month, who are just normal people going about their business, marketing their product. They are people marketing home improvements, utilities, telecoms providers, banks, pensions, people selling insurance or fine wines, and charities. These are the sort of people who have a low-level number of complaints made to the TPS about them, but which when aggregated together amount to half of the concerns. How far do you want us to go in terms of getting to those organisations? It might be by mistake; there might be any number of reasons why they may have overlooked the fact that someone is on TPS. They may then say, "Okay, right, we know you are on TPS and we will never call you again."

Q146 Philip Davies: You talked about all these additional powers that you would like.

Simon Entwisle: No, no.

Q147 Philip Davies: You did say that there were some additional powers that you have asked the DCMS for.

Simon Entwisle: That is correct, yes.

Q148 Philip Davies: What have you asked it for, when did you ask for them and what has the response been?

Simon Entwisle: What we have asked for is to reduce the level of distress that you have to show in order to levy a fine. At the moment it says "substantial distress and substantial inconvenience"-that is a lot. We have not yet come across a single call that could cause what the law would see as substantial distress, so we have to aggregate the number of complaints and the number of calls that organisations have made-at least 1,000-to be able to get close to showing substantial distress and substantial inconvenience. That means the very worst offenders that ICO is able to fine, and we fine some of the worst offenders. We are talking in terms of nuisance, annoyance, inconvenience and anxiety. If that were the case, you would probably be looking at maybe 100 calls in a year.

Q149 Philip Davies: When did you ask for these powers?

Simon Entwisle: We put our business case to the DCMS on 29 July.

Q150 Philip Davies: Have you had any response?

Simon Entwisle: The Minister is coming on next, but we have not had any comments back yet. The business case was submitted following a roundtable meeting that Ed Vaizey chaired about two weeks earlier. We raised this as an issue earlier in the year to say that the law was not working as well as we would hope in this area and that we would suggest a change. They have been broadly supportive of the suggested change, but even with that change, it does not get the organisations that I have just talked about. Around 50% of the complaints are generated by this huge number of organisations that are carrying out direct marketing and perhaps mistakenly contacting someone who is on the TPS. I would say to go for those requires the Government to challenge the balance between allowing people to market goods and services, and protecting the consumer from nuisance calls, which is not a decision that the ICO can take.

Q151 Philip Davies: You talked earlier about how you all have to be involved because you all have different roles to play, and so you are all part of the solution. How often do your organisations meet together to discuss this particular issue and what concerted action are you going to take together to solve it?

Simon Entwisle: We have a concerted action plan that is published on our joint websites, which includes the review of the TPS that we have talked about. It includes regular meetings, both at a senior level and with-

Q152 Philip Davies: What does "regular meetings" mean? If you meet once a year that is regular, isn’t it? It is regularly once a year. What does a regular meeting mean?

Simon Entwisle: At enforcement level it is monthly meetings. My staff meet monthly with Ofcom staff, with other staff and with staff from consumer organisations as well. We also meet other law enforcement agencies.

Q153 Philip Davies: What happens at these meetings? Do you say, "We are not making any headway, let’s just keep on doing what we are doing," and next month, "We are not getting any further; we’ll just keep on doing what we are doing"? What actually happens? It is like a quango bonanza: "Let’s have a meeting and let’s do absolutely nothing afterwards." It is a triumph of bureaucracy, isn’t it?

Simon Entwisle: We have issued a few fines, for instance.

Claudio Pollack: On the description of "absolutely nothing", we meet regularly because we both have an interest in reducing harm in this area and we have developed a joint action plan to make things better. On silent and abandoned calls, at each stage Ofcom has used the extent of our powers to full effect. The nature of the problem is changing. That is why we have done research and analysis to understand the nature of the problem, to understand the pinch-points, and to work together to understand. I can go through some of the initiatives that we are doing. With the complaints that we get we can identify-and these will be the worst infringers-only a small fraction of who is causing the harm. How can we go after them? So we are-

Q154 Philip Davies: Have you asked the Minister for any additional powers, or have you asked the Government to give-

Claudio Pollack: We have. In terms of our co-operation, we have a particular issue that the legislation that governs our enforcement does not allow us to share intelligence with the ICO.

Q155 Philip Davies: When did you ask for that?

Claudio Pollack: We asked for that some time a year ago.

Q156 Philip Davies: What is the response from the Government?

Claudio Pollack: The response is yes. In the Government’s strategy paper on communications, there is a commitment to change the legislation to allow us to share intelligence of the enforcement efforts that we are collecting.

Q157 Philip Davies: You have been waiting a year already for that.

Claudio Pollack: It has been part of an ongoing debate, so I do not think that is a game changer. I can describe some of the things that are the game changers. I think that is correcting a slightly absurd anomaly that one enforcer in this area can’t share intelligence with another enforcer in this area. I do not think it is a big inhibitor to our effectiveness, but I can describe some of the things that we are doing. Particularly, if I can go to the-

Q158 Philip Davies: But my point is that what you are doing is not working. That is my whole point.

Claudio Pollack: It would be great if we were in an environment, which is not always the case, where there was a magical silver bullet and we just had not bothered or had not thought about it. The truth is the nature of the problem has changed substantially in a very short period of time. This involves a lot of co-ordination and technical analysis, and that needs to be done. There are no shortcuts here; that needs to be done. People are making these calls and generating them, causing harm, and we can’t even identify who they are. So what is it that we should be doing differently, other than working with industry to make sure we have a process in place so that we can identify who is causing the harm more quickly and go after them? That is doing something, but it takes time. It takes time because it involves working with network industry standards organisations to agree new standards and new protocols so that we can trace through the network. A few years ago a call from BT was from BT to BT. Now there are multiple parties involved and what we find is that when we are chasing the scent, the scent goes cold.

I do not see how you can characterise that as us not doing anything. What we are doing is identifying the nature of the problems and the obstacles to effective enforcement, and tackling those. When we do the analysis, if there are gaps that require legislative change, we will speak up and say so, but we need to understand what the nature of the problem is that is restricting our effectiveness in that area. That is not a case of us not doing anything. That is a case of us using our powers as they exist to the full extent and doing the analysis to understand the problem so that we can collectively be effective with the problem as it is emerging today.

Chair: I am anxious to get on to the Minister, but just before I do, a question from Jim Sheridan.

Q159 Jim Sheridan: May I carry on with Mr Entwisle about these fines that you talk about. If I was a persistent offender listening to today’s session, knowing full well I could be fined up to £2 million, and then I heard you say, "It is very difficult; it is very complex," what incentive would there be for me to change my ways? What is the maximum fine that has been levied?

Simon Entwisle: The fine that Ofcom can levy-£2 million-is against telecoms providers. Probably the most relevant fine is from us. The biggest fine so far, in two connected cases, was £440,000. Our maximum fine is £500,000, but we do have to take into consideration the financial situation of the organisation that is causing the problem. The legislation requires us to do that.

Q160 Jim Sheridan: Why should you have to take any consideration of their problems?

Simon Entwisle: It is because of the constraints-

Jim Sheridan: Behaving badly, yes, but if they are not a big company, you can stop them and the result would be the same.

Simon Entwisle: The maximum we can fine is £500,000, but when we are issuing a fine, as well as the level of harm caused, we can’t fine a tiny organisation £500,000 even if we think they have caused a lot of harm, because we have to take into consideration their financial position. The law as it stands is set up so that-

Q161 Jim Sheridan: Why do you need to take into consideration their financial position?

Simon Entwisle: It is part of the law that-

Q162 Jim Sheridan: If they go out of business, they go out of business.

Simon Entwisle: It would require a change of the law for us to do that.

Q163 Jim Sheridan: Is that what you have asked for?

Simon Entwisle: No.

Q164 Jim Sheridan: So persistent offenders know there is no danger of them going out of business if they persistently offend.

Simon Entwisle: That is right.

Q165 Jim Sheridan: What incentive is there for them to mend their ways?

Simon Entwisle: This is part of the balance of how far the Government want a regulator like us to go. At the moment, the Government make it clear, "We don’t want you to put people out of business." We have to take into account their financial circumstances. They give us information about how much they have made on this and we can only levy accordingly.

Q166 Jim Sheridan: In practical terms, you look at the company and say, "Well, how much do you have and how much can we fine you? You let us know"?

Simon Entwisle: We have to do an analysis of their accounts. We are required to. It is not something that we have any leeway with. It is a requirement of the law and, presumably, the Government put that requirement in because they wanted to take into account the economics of the situation. It is back to what I said earlier: if the Government want to push this further, they could give us powers so that we don’t have to take that into consideration-so that the ICO could put people out of business. But, as a regulator, I don’t think that is a decision for us to take. I think that is really for the Government to consider and to give us the powers, and we will do it.

The situation at the moment is that we have levied some fines and we have seen them have a result. We have found concerns with our ability to levy those fines, and we have put forward suggested changes to the legislation that would allow us to levy more fines. But a change like that might be one that the Government think is appropriate and, if that was the case, we would do it, if that was what we were asked to do. But it is a political decision-a Government decision-and not one for the ICO to take, I think.

Claudio Pollack: Is there time for me to answer from our perspective on fines?

Chair: Yes.

Claudio Pollack: For the brand names that we have heard of that were generating silent and abandoned calls, I think the increase in the level of the fines that we have taken, as well as the fines themselves, has caused a lot of really quite serious adverse publicity and reputational consequences. I think that there are deterrents there for bad behaviour and using dialler equipment irresponsibly. For the smaller companies at the margins of acceptable marketing activity-the PPI mis-selling claims management and accident claims management firms that hide their identity-I think the incentives there for compliance are poor because it is hard to find them, and because each of them generates a small amount of harm, the ability to process in sufficient volume is a difficulty and that is why the harm continues. That is why our focus has to be on identifying them and looking at a system like accreditation that means that more of them really submit to the standards that we are setting. I think the deterrent is insufficient for those.

Q167 Jim Sheridan: I know you take the whole matter seriously, but do you think the service providers take the whole question seriously? What incentive is there for them to clamp down on this?

Claudio Pollack: If by the service providers you mean the telephone companies-the networks-we are seeing a lot of willingness and desire in our engagement with them on a number of technical issues, in particular with the major suppliers. As I think BT said last week, it is their customers who are being annoyed through this. If by service providers you mean the people generating the calls, I think not enough, because they can hide and therefore there are no consequences, and that is the real challenge that we are focusing on.

Q168 Chair: When you say they can hide, at the end of the day these companies are not making calls just because they want to annoy people. They are presumably making calls because they think there is a chance that somebody is going to say, "Gosh I am so glad you have rung. Yes, I would love to make a claim for the mis-selling of PPI," and in order to do that, they are going to have to say who they are. So you should be able to identify them because eventually they are going to have to say, "Write to us here," or whatever.

Claudio Pollack: That is right, but remember I am focusing here on silent calls in particular, so this is where the call is hung up and there is no identification. They are supposed to, if the call is abandoned, play a recorded message that contains no marketing that gives a number that people can ring to opt out. They are supposed to display the telephone number-this is the 1471. When they do not do that, it is very hard to identify them.

Q169 Chair: Can we go to Mr Entwisle? Silent calls are deeply annoying, but a lot of them are not silent. Probably the majority are not silent.

Simon Entwisle: That is how we lead to fines. The whole point of our approach is that we can identify organisations in certain circumstances. We do have to engage with those organisations. I think we have 60 or 70 organisations we are engaging with at the moment. If they don’t improve-again the legislation requires us to give them the opportunity to improve-we can move towards a monetary penalty if we have enough to show substantial damage and distress. The changes would conflate that process and make it easier for us to fine but, as I said before, I do not think that would eliminate the problem.

Chair: I think that is probably all we have for you, so let us move on to the Minister. Thank you.

Witness: Edward Vaizey MP, Parliamentary Under-Secretary of State for Culture, Communications and Creative Industries, gave evidence.

Chair: For our second part I welcome a regular guest before the Select Committee: the Minister for Communications and Creative Industries, Ed Vaizey. Tracey Crouch will start again.

Q170 Tracey Crouch: Minister, I get many complaints about nuisance calls. I imagine your postbag is full of nuisance calls. Do you think the Government is doing enough to tackle this?

Mr Vaizey: Like you, Ms Crouch, I also get a lot of letters about nuisance calls, mainly from colleagues in the House. It is probably up there in my top three issues in terms of my postbag, and therefore it is up there in the top three issues I want to tackle.

I think we are now getting into gear. This is an issue really that I started to look at quite hard over the last 18 months and, I think like you, I was relatively surprised at the quite complex landscape that exists in terms of how one deals with nuisance calls, but we have started to have roundtables, bringing the two regulators together but also stakeholders such as Which? and others who have interest in these issues, as well as obviously telecoms companies. We have put together a pretty comprehensive look at what needs to be changed. Some of those issues have already come up in the evidence you have just heard and the evidence you heard last week: things like the threshold of what constitutes a nuisance call, the nature of consent, encouraging the use of technology, and encouraging in particular much closer co-operation between the two regulators-Ofcom and the ICO.

Q171 Tracey Crouch: I am pleased that you mentioned Members of Parliament writing to you because I have written to you on a number of occasions about nuisance calls. On those occasions, you have replied saying that this is in the remit of Ofcom or the ICO, but clearly Ofcom is just dealing with a very small percentage of the problem, which is that of silent calls. I appreciate the ICO is probably under-resourced to deal with this, but clearly not enough is being done, given the fact that the problem has continued to increase. Do you think that my constituents and your constituents think that you, Minister, are doing enough to tackle this problem?

Mr Vaizey: You tell me if your constituents feel that-maybe you could put it in a survey-but I think that we have raised the issue very much up the agenda. We are going to publish our strategy paper at the end of October. We have the ICO and Ofcom publishing their strategy paper at the end of July, and as you know it was mentioned in our overall communications strategy paper as an important issue.

Echoing what was said earlier by Ofcom and the ICO, I think there has been an explosion in nuisance calls over the last two or three years. It is interesting, if you look at the breakdown, that by far the largest number have been PPI claims, which have emerged as a result of regulatory decisions taken about PPI. It has, in effect, created an industry that appears to be relying on nuisance calls. As was also indicated, the more sophisticated use of technology by nuisance callers has also caused a problem. At the end of the day, you can publish strategy papers and so on, but what I will be measured by is whether we can make a significant impact on the number of nuisance calls.

We have increased the fines that Ofcom and the ICO can levy in this area. You have heard them give evidence that they have fined different organisations. It is also important to recognise that, under the radar, they also engage with different organisations in a preliminary engagement before taking overt enforcement action, and I think that also has an impact.

Q172 Tracey Crouch: Do you think we might be dealing with this issue too late? We heard earlier that this has been a problem since 2005, recognised post-2010, but the problem has increased quite substantially and people are beginning to get incredibly fed up, to the extent that they are reverting to very extreme measures like either changing their number, or screening their telephone calls, which in itself is a bit of an affront to general freedoms. Do you think that you could have done more and that you could have done it quicker?

Mr Vaizey: I think there is always frustration with the Whitehall process. It does take time but, to be fair-without wishing to sound like I have become a bureaucrat after three years in the Department-I think processes do need to be gone through. You need to consult and you need to examine the implications of any changes that you are going to make. But I can see why people would be frustrated.

I regard myself as an activist Minister and I will continue to work with the regulators. Without wishing to sound facetious, the point about the roundtables was indeed to get people in a room talking and working together to see what can be done now to make it more effective. How shall I put this? I think ministerial engagement has improved matters and I think continued ministerial engagement will ensure that the two regulators continue to take effective action when they can.

We will make the changes that they have called for and suggest will improve the situation, but I think there won’t be a substitute for continuing to engage with regulators, consumer groups and telecom companies in the same room. For example, I said to the regulators that I would happily ring up any chief executive they care to give me the name of who they think is presiding over a company that is causing a problem. I do not see anything wrong with informal engagement at that level as well.

Q173 Tracey Crouch: Given the scale of the problem, do you have a dedicated team at DCMS dealing specifically with this issue?

Mr Vaizey: Yes. They are part of our communications team. We have two of them sitting behind us, and they work very effectively on this issue pretty much full time.

Tracey Crouch: Two.

Mr Vaizey: Yes. As you know, the Department is half the size it was when we took over in 2010. We are very conscious of giving value for money to the taxpayer, so we are a lean, mean but very effective Department, covering a huge range of very important issues.

Q174 Tracey Crouch: Do you think there could be potential for more resource in the regulators, therefore, to tackle what is obviously an increasing problem?

Mr Vaizey: Ofcom has cut its costs by 30%, but I still think it is proving to be an extremely effective regulator. Those of you who are using 4G, for example, will credit Ofcom with releasing that spectrum six months early. I am not technically responsible for the ICO, which reports into the Ministry of Justice. I have brought it within my remit because I take nuisance calls so seriously, but I am not responsible for the day-to-day operations of the ICO so I couldn’t comment on its resource or how it is coping with the appropriate economy drive that the Government is spearheading.

Q175 Jim Sheridan: Minister, you probably heard the previous witnesses say that they have made representations to you about how they need more effective changes to do their job more effectively. One of the things-I think you mentioned it-was fines, and I was somewhat dismayed when they said that although they could fine up to £2 million, they had never ever done so, and that it has been complex and difficult. I think one of them said, "We have been instructed not to put companies out of business." To me, that is like a judge saying to repeat offenders, "Continue doing what you are doing and I guarantee you won’t go to prison." If repeat offenders continue to do what they are doing, in the knowledge that they are not going to go out of business, what is the incentive for them to do anything about it?

Mr Vaizey: All the legislation that surrounds dealing with nuisance calls stems from the European Union. The PECR regulations say that fines should be effective, proportionate and dissuasive. I think the regulators are referring effectively to a legal requirement under the directive and, as you know, neither the last Government nor this Government want to gold-plate directives, but they can be fined again and again. I am not aware of a business model that would incorporate quite substantial fines, particularly for persistent offenders.

When one talks about nuisance calls, because of the sheer frustration they engender, quite understandably, in a lot of consumers, it is important that you want action this day, but if you put that in context, there has to be a quasi-judicial process. You can’t just identify someone who looks like a nuisance caller and turn up and fine them. You have to go through a process to prove that they have breached the regulations. It is also important, frankly, that they do pay the fines. If you fine them to such an extent that they effectively say, "We will bankrupt ourselves," in a sense you have scored a pyrrhic victory.

Q176 Jim Sheridan: But if these repeat offenders, by their actions, generate £1 million of business and then they are fined £100,000, that is £900,000 profit and they will continue doing that.

Mr Vaizey: I think that is a very fair point. The phrase is proportionate, but it also has to be effective. It is not an effective fine, in my opinion, if it does not hurt, and it should hurt.

Q177 Jim Sheridan: How should it hurt?

Mr Vaizey: It should persuade anyone. As the Chairman said, people do not indulge in nuisance calls-I am not here, obviously, to defend people who indulge in nuisance calls-but they are doing it to make a profit. I would expect the fines to be substantial enough that they would take the view, "If another fine comes along we, as a company, will be in real financial difficulty."

Q178 Jim Sheridan: We need something to concentrate their minds on the thought they are going to lose their business.

Mr Vaizey: I would hope the first fine would concentrate their mind on not getting a second fine.

Q179 Jim Sheridan: Persistent offenders.

Mr Vaizey: Yes, I think it should.

Q180 Jim Sheridan: They should lose their business.

Mr Vaizey: No, I think it should concentrate their minds that if they carry on like this, it is effectively going to make it almost impossible for them to conduct their business. To cut to the quick, I would not want to see someone incorporating regular fines into their business model saying, "We can make enough profit to absorb fines," like a delivery driver who might say, "I am happy to get four parking tickets a day."

Q181 Angie Bray: You said that the problem has really exploded in the last two to three years, which does pretty much coincide with your tenure in your job.

Mr Vaizey: I hope there isn’t a causal link you are trying to establish.

Angie Bray: I was going to ask if you would accept that the buck does stop with you, as the Minister responsible, and that this explosion has taken place during your time in office.

Mr Vaizey: Yes. I would also accept that I have seized the buck. The ICO falls under the Ministry of Justice, but I have taken it upon myself to co-ordinate these two regulators and tackle the issues of nuisance calls, because telecoms falls within my jurisdiction and it is a telecoms problem.

Q182 Angie Bray: On a rating of one to 10, where would you put yourself at the moment?

Mr Vaizey: I would put myself at a B+, rapidly improving.

Q183 Chair: It is not my place to defend the Minister, but presumably you assumed responsibility for this matter only when telecoms moved from BIS to you?

Mr Vaizey: No. It is very gallant of you, Mr Chairman, to come to my defence, but unfortunately, in spirit of honesty, I must confess that I was a BIS Minister, and therefore when Vince lost his responsibilities, he lost me as well-something that he has lamented to this day.

Q184 Jim Sheridan: What about the one to 10?

Mr Vaizey: I was reluctant to go down the road of one to 10. It is probably six, with hope for improvement.

Q185 Angie Bray: I like your confident approach. Would you accept, though, that one of the problems we have here-perhaps this is something that you recognise needs to be done-is this terrible lack of clarity as to where the responsibility really does lie for tackling this problem? Would you accept that?

Mr Vaizey: Yes.

Q186 Angie Bray: You would. There is a question here to suggest that perhaps we might have a Minister responsible for nuisance calls. That might be pushing it, given your own mention of the fact that you are cutting back the size of the Department and that you are very aware of the cost to the taxpayer, but do we need a single regulator? Would it make your job easier to have a single regulator that you could work with and hold to some extent responsible?

Mr Vaizey: It has certainly crossed my mind and I think it would be sensible for the Government at some point to review the interaction of the ICO and Ofcom on a whole range of issues, for example data protection. I have to choose my language carefully because I don’t want to appear-data protection was not really a mainstream issue 10 years ago, I would say. Now, with the advent of the internet, data is a buzzword, and the use of data from the way we use the web is an incredibly important economic tool, but it is also a very important issue because of people’s quite justifiable concerns about their privacy, and for me the internet is a communication tool. There is something I think the Government should do in terms of reviewing how that landscape fits together. If you take the revision of the data protection regulations, 10 years ago that was an issue for the Ministry of Justice or its predecessor Department, and someone like me-a Communications Minister-probably would not have had a huge role. Now these regulations are very important for the kind of organisations that come within my remit.

At the moment, my view is pretty straightforward, which is that we are where we are. I want to make an impact. Were I even in a position to announce that we are merging the two regulators and that is it, I think you would then have two years of potential disruption. People would get into their different silos to defend what they might perceive as their empire. What I have been pleased by is that since effectively intervening in this arena over the last 18 months, bringing the regulators together to explain the issues that they feel need to be improved and also pressing them to take more action, issue more fines and so on, I think we now have a much better working environment. That translates itself potentially in the consumer’s eyes by the fact that if you visit Ofcom’s website, you will be directed to the ICO’s website in the appropriate way and vice versa, and by the fact they published this joint action plan. I do think-others can correct me if I am wrong or blowing my own trumpet-that they are working much more closely together as a result of that intervention.

I want to deal with where we are now, but I think-long-term horizon scanning-there is definitely some thinking to be done about how the two regulators work together on a range of issues.

Q187 Angie Bray: You are talking about taking quite a lot of interest in this particular issue. You mentioned to my colleague earlier that it is one of the top three issues coming across your desk. How much time-what percentage of it-do you reckon you have to give to this issue really to get to grips with it?

Mr Vaizey: I will give as much time as it needs, but I would not want to put a percentage figure on it. A Minister’s time is often taken up by public appearances, giving speeches and going to events, but in terms of behind the scenes work, it takes up a significant proportion.

Q188 Angie Bray: Can I finally turn to something you mentioned about the fact that nearly all this is driven in terms of penalties and stuff from the EU? Is it a fact that a lot of what you can or can’t do is constrained by the directives we get from the EU? Are you blaming the EU, or is that just factual?

Mr Vaizey: I am mindful of the make-up of this Committee. Who knows in five years’ time, when this Committee is meeting again on this issue, where we will be in terms of our relationship with the EU? But, no, I would not, to be fair, describe it as a constraint. I think the regulations are there from the European Union to deal with nuisance calls. I engage with a lot of people on this issue. I engage with consumer groups who, to a certain extent, can be free to call for whatever they want-that is perfectly appropriate-and I engage with the regulators. No one has come up with some magic solution: "If you did this one thing, nuisance calls would reduce by 15%." I know that sounds deeply frustrating but, by and large, the regulations are workable. We can fine people. If anything, listening to the evidence from Ofcom and the ICO, I think there was frustration with the companies they are having to deal with on trying to track them down and hold them to account. That is not really anything that regulations are going to change dramatically.

Q189 Angie Bray: Why did you mention the EU and talk about the fact that-

Mr Vaizey: Just because those are the regulations. I hope I did not dissent from the regulations. I think it is a fair point to say that the fines should be effective, but also proportionate.

Q190 Angie Bray: What discussions have you had with any foreign Governments about facing up to this? Do they have a challenge, too, with nuisance calls?

Mr Vaizey: I haven’t had formal discussions. I meet my counterparts occasionally at European Councils and may have raised it in the margins, but I have obviously talked with our regulators and they do work across with other regulators. I think there has been evidence put in to you about how they both work with the different European regulators and also with the FTC in America to identify companies that might be calling from those jurisdictions. They do share information and data with other regulators.

The other thing that has come out is that this is not a problem isolated to the UK. It is a problem that is widespread across Europe. I hesitate to bring it in as evidence because I am not 100% sure of my facts but, as far as I understand it, Germany has introduced much more draconian anti-cold calling legislation, effectively. I do not know whether that is going as far as banning marketing calls, but they still have a significant problem.

I think it is important for me to look at two aspects of this. One is making changes to the law when the regulators say, "This would be helpful, Minister, sharing data between the ICO and Ofcom and lowering the threshold of what constitutes a nuisance call." But also you have to drive the process forward and you have to have regular catch-ups with your regulators: "What are you doing? Keep pushing."

Q191 Conor Burns: Minister, picking up on the point you made in response to Jim Sheridan, you said that you did not want fines to be so meaningless that they simply became part of a business model where people absorb the fine but continue to make a profit. Surely if it were the case that the fines were sufficiently meaningful, people would be going out of business and the number of calls would be diminishing, and the fact that they are not would indicate the fines are not that meaningful.

Mr Vaizey: You have a situation where you have, to a certain extent, lots of small companies wanting to build a business. I mentioned PPI and I think that is significant. But look at very prominent companies and the fines that Ofcom has levied. TalkTalk is a multi-million pound company. We do not want to put TalkTalk out of business because it provides a very valuable service for many millions of customers, but it was fined £750,000 this year and I think even for a business that size that is not an insignificant sum. Were the chief executive to be reporting to her shareholders every year that TalkTalk was absorbing £1 million to £2 million a year in fines, for the sake of argument, I think her board and her shareholders would be asking some quite tough questions about that. It would not put TalkTalk out of business and I do not want to use it as an example to imply that it is going to suffer persistent fines because I think its new chief executive has got a grip.

I think that is important. I am told that any company that generates up to £1 million of turnover on the back of this can be subject to the maximum fine, so there is room really to hammer people. I do not know all the businesses that have been fined, but if you look at something like DM Bedroom Designs in Glasgow-I do not know its accounts inside out, but it does not strike me as being a multinational business-it was fined £90,000, which is not an insignificant sum for any business.

Q192 Conor Burns: If we were to go back to those who have contacted us on the question of nuisance calls and say to them, "We asked the Minister when there would be a noticeable improvement and a diminution in the number of calls," what time scale would you put on that?

Mr Vaizey: I want to see an impact over the next 12 months.

Q193 Mr Leech: Minister, you said you had seized the buck and you arranged these roundtable events. I have never heard a Minister claim to have seized the buck before. You pass the buck, but not seize the buck.

Mr Vaizey: Somebody else passed the buck.

Mr Leech: Then you have arranged these roundtable events. Does this suggest that you were not satisfied that the ICO and Ofcom were taking action or doing so quickly enough?

Mr Vaizey: I think that the roundtables have made a significant difference to the focus and sense of urgency in dealing with this issue. It has made a difference in terms of focusing on where we can improve the regulatory environment. You can read into that what you like, Mr Leech.

Q194 Mr Leech: It would be fair to assume that you have concentrated some minds?

Mr Vaizey: I would like to think I have played a role in doing that, yes.

Q195 Mr Leech: Is there anything that you personally think they should be doing that they are not currently doing?

Mr Vaizey: I don’t think they were working closely enough together 18 months ago. I think they are working much more closely together. To a certain extent, it might be a cultural thing. I think the regulator should be bolder with the Minister and with the Government, and to a certain extent I think your questioning encouraged them to be so in the earlier session. I do not think they should hold back. If they see a problem that they think the Government can help them with in terms of introducing a regulation or removing a barrier to them taking action, I think they should do it.

Perhaps this is dangerous territory to get into, but regulators should be in the territory of saying, "We have tools to deal with this problem but we are the experts and we should be proactive as well in thinking in policy terms what could Government do to help us." I might be being unfair, but for me it feels, 18 months down the line, that they are working much more closely and effectively together.

Q196 Mr Leech: How will you judge the success or otherwise of the recently announced joint action plan?

Mr Vaizey: As I think I indicated to Mr Burns, I want to see a significant impact on the number of nuisance calls. To a certain extent that is a potential hostage to fortune. What struck me particularly when preparing for this sitting was that inadvertently you can create a nuisance call problem in a different policy area. Standing up for consumers on PPI claims is absolutely the right thing to do. Inadvertently, it seems to have created an industry of nuisance callers. We need to be aware what it might do when we intervene on behalf of consumers and we need to be ahead of the curve on issues like that. We need to be focused on outputs. We need not to look inwards. As I keep saying, the regulatory changes are very important, but it is vital that we keep focused on impacts.

Q197 Chair: You said you inadvertently created this industry around PPI calls. Do you believe that although there are huge numbers of people being plagued by these calls, who probably have never had PPI and certainly do not have a claim for mis-selling, nevertheless these companies are doing a service in that there are some people who are entitled to make a claim who would not otherwise be aware of it unless they had received a call?

Mr Vaizey: I don’t know the answer to that question, to be honest, Mr Chairman. I think it would be dangerous for me to answer it. I think what came out of this process is that the Claims Management Regulator, which on the one hand was looking at the legitimacy of the companies that were offering to help with PPI, has now added to its focus the impact of cold calling. It has come on board, working with the ICO and Ofcom on this issue, and is now engaged in the process.

Q198 Mr Leech: Is there not a danger though, by the success or otherwise of us moving forward being based on the number of nuisance calls either going up or down, that you could be making yourself a hostage to fortune? If there are other situations similar to PPI where businesses think, "This is an opportunity. I am going to take the risk. I am going to make these cold calls," aren’t there other areas where you should also be measuring success or failure, rather than just simply about whether you reduce the number of nuisance calls? For instance, are we making people more aware of who they should be complaining to? I think that one of the biggest problems is that people simply do not know who to complain to when they are being hounded, and I suspect that is mainly with the elderly.

Mr Vaizey: It is a potential hostage to fortune to look at the impact on nuisance calls, and to a certain extent that is why I raised the PPI issue, because you could get a situation that we don’t know about at the moment that would generate a lot of marketing calls, if I can use the proper term. There is an element of subjectivity in any kind of survey, but you would want to see consumers saying they knew who to complain to, that they found it easy to complain and that they felt confident action was being taken. But ultimately, if somebody is getting 10, 20 or 30 calls a day, the real impact is that they start to get fewer calls.

Q199 Mr Leech: Finally, what is your view on the effectiveness or otherwise of the TPS system?

Mr Vaizey: It is part of the stakeholder group and TPS is very much at the heart of this issue. It is pretty obvious from the evidence you have received that there are concerns from people who are under the impression that by signing up for TPS they will be protected from nuisance calls, and they are therefore extremely frustrated that they receive them. There is a nuance there as to whether people fully understand what it means to be part of the TPS, but I am not criticising consumers for that. I am very pleased that as part of the joint action plan Ofcom is going to undertake a review of the TPS and I look forward to seeing its findings in the spring. If it recommends measures for improvement, we will look at those very carefully.

Q200 Jim Sheridan: Minister, this session is primarily to deal with nuisance calls and how they impact on our constituents, which you admit is a big problem. I do not want to labour the point, but can I take you back to your scenario about TalkTalk being fined £2 million when it generates £20 million? I don’t go to shareholders meetings, but do shareholders then say, "Let’s sacrifice the £2 million and don’t you make any more nuisance phone calls"? Is that what happens?

Mr Vaizey: I am using a common-sense approach, Mr Sheridan, so I would assume that a household name like TalkTalk, or indeed HomeServe, is not the sort of company that wants to absorb that level of fine, either financially or in terms of the reputational damage. I am looking at some of the fines that have been levied on other companies that I am not so familiar with, and they seem fairly substantial for what might be small or medium-sized enterprises.

Q201 Jim Sheridan: But they are not reducing the number of nuisance phone calls.

Mr Vaizey: To a certain extent, although I can only speak anecdotally. I certainly know that the new chief executive of TalkTalk-who has probably been in place now for about two years, so you can’t necessarily describe her as new-saw customer service as one of TalkTalk’s biggest issues that she had to get to grips with. But I will happily take away from this an implied message from you, Mr Sheridan, and I am going to talk to her and I will talk to the chief executive of HomeServe and ask them what impact the fines have had on their business in terms of changing their cultural behaviour.

Q202 Jim Sheridan: I do not want to focus just on TalkTalk; it is all repeat offenders. Do they sacrifice their shares for the sake of a certain means of finding-

Mr Vaizey: Mr Sheridan, to a certain extent I can’t do more than repeat what I said. From my perspective as a policymaker, my view and my message to the regulators, if they are listening to this evidence, is that I want fines to be effective, proportionate and dissuasive, and by dissuasive, I mean that they should not be set at a level where companies think they can absorb them as part of their business plan.

Q203 Steve Rotheram: Minister, you said in your opening remarks that it was a complex area and you also said that your Department has made progress in the last 18 months. You scored your performance as six out of 10, which I think would be the equivalent of "satisfactory", although of course under the proposals by your colleague, the Secretary of State for Education, that would now translate to "requiring improvement". What more do you believe can and should be done to enable consumers to complain about nuisance calls? Given what John Leech said to witnesses earlier, will you be writing to billing companies to tell them that they should have the process clearly outlined on the bills that customers receive?

Mr Vaizey: First of all, let me say how much I regret falling into Ms Bray’s trap of scoring myself. I was attempting to be modest, and of course I have now set myself up for a fall, but that is life. I wasn’t as quick on my feet as I could have been. In terms of your points, Mr Rotheram, certainly I will look at the idea of whether companies that send bills should include on the bill a notice to customers saying, "If you are receiving nuisance calls or if you perceive"-I assume you are saying that the actual company-

Q204 Steve Rotheram: It just gets around that thing that we were told earlier that 85% of people have access to the internet but 15% do not, so they can’t go online to find out how to complain. But if it was clearly outlined on their bill, which they all receive-that is online if people get an e-bill, or if they get a hard copy-no one can say, "I didn’t know how to complain."

Mr Vaizey: That is certainly an idea that is worth looking at. Without wishing to make you roll your eyes in horror, you can imagine the regulatory soup you can get into. You write to an electricity company; suddenly Ofgem has something to say about whether the billing should include something about nuisance calls. I totally accept the point, by the way, that there are people who are not using the internet at the moment and also that those people who are not using the internet are likely to be quite vulnerable and may well be impacted disproportionately by nuisance calls. For those who are using the internet, the process has become a lot easier. As the regulator said, if you google "nuisance calls" you will get the two regulators coming top of the Google rankings. As I say, they have cleaned up-this was part of the discussions we had at the roundtables-the websites, so it is much easier to navigate and make a report. You also have in your written evidence things about short messaging for spam texts and so on. So there are improvements being made all the time.

Q205 Chair: Minister, we had evidence last week, which I think you have studied, from Which?, which proposed eight specific measures that it said would tackle the problem. Very quickly, can you give us a yes or no to each one? Introducing an expiry date on third-party consent.

Mr Vaizey: It might be possible to place a limit of 12, 18 or 24 months on consent, but obviously we have to take into account the regulatory impact on businesses.

Q206 Chair: That is sort of a yes.

Mr Vaizey: It is a "we are considering".

Q207 Chair: All right. Obligation on businesses to demonstrate to the ICO that a consumer has given consent-in other words a reversal of the burden of proof. At the moment, businesses do not have to demonstrate; the complainant has to demonstrate they did not give consent.

Mr Vaizey: My understanding is that the ICO is already able to ask for this when considering a complaint against a company.

Q208 Chair: Right. I think we have talked to some extent about lowering the threshold for enforcement action-you have said that that is something you are considering.

Mr Vaizey: Yes. We have received the business case from the ICO, which I understand your Committee has requested, and we are looking at how we might implement this.

Q209 Chair: Extending the PECR regulations.

Mr Vaizey: My understanding is the Information Commissioner can already take action under Data Protection Act powers and is focusing on those that collect and sell personal data. I should say, Mr Chairman, that I did do my homework. I read all the oral evidence over the weekend and I commissioned a table from my Department. On the left-hand side it has what Which? has called for, and on the right-hand side it has our response. I will happily give a copy to you.

Q210 Chair: That would be very helpful. If you would like to let us have that, that will short circuit your interrogation.

Mr Vaizey: Indeed it will.

Chair: I am sure it will delight you to know that that means I can move even more swiftly to Mr Davies.

Mr Vaizey: I was about to say, "When are you releasing Mr Davies?"

Q211 Philip Davies: Minister, as usual you have given a very polished performance and you have been engagingly self-deprecating, but what I am really anxious to get to grips with is your view as to, given that we are in a bad situation with nuisance calls, who is most to blame for this? Who should my constituents blame most? Should they blame you? Should they blame Ofcom, the ICO, or TPS? Who would you say should be at the top of the firing squad list?

Mr Vaizey: I felt mildly irritated reading the oral evidence last week when there might have been suggestions from some of your witnesses that I should be thrown to the wolves. I know that you were only being light-hearted when you said that this week you would take me to task in quite brutal fashion. Let me echo to a certain extent what I said earlier to the Chairman. I have picked up the buck, so I am accountable. Clearly my self-deprecation is, I am afraid, not going to extend as far as saying that I am to blame, but I have taken up this issue. I have worked hard at it over the last 18 months. We have made progress. We have made practical progress in pushing the two regulators much closer together. We have made practical progress in terms of me being effectively the layman saying, "This website is confusing. If I was trying to complain I couldn’t complain. I want it cleaned up. The regulatory process is confusing. I want a much clearer roadmap. I will take action where you tell me that changing regulations will help you, but I want you as well to be proactive in taking action and enforcement."

We have a wide range of stakeholders in the sense of not just the consumer groups, but the telecoms companies. One thing we have not really dwelt on in this evidence session is the importance of technology. I think it is important that consumers are aware that they can-I don’t think it is self-defeating or throwing your hands up and saying, "Nothing more can be done"-employ technology where it is affordable and appropriate to screen calls, as you might put filters on your computer. So all those are factors. I was pleased, for example, to see BT give evidence last week that it was going to upgrade its exchanges so that you could identify calls from abroad and so on. All those are coming together into a coherent approach to have an impact on this problem.

Q212 Philip Davies: In a nutshell, you would put yourself at the top of the firing squad list, Minister. Is that what you were trying to say?

Mr Vaizey: I would say, Mr Davies, that I am accountable to your constituents for this issue.

Q213 Tracey Crouch: If I may just pick up on what you said about technology, there is a practical point, which is that it would limit us as Members of Parliament, for example, from calling our constituents under some of the new technological advancements.

Mr Vaizey: I would be careful what you say, Ms Crouch, because they will start selling like hotcakes if word gets out you can buy a phone to stop a politician calling you.

Q214 Tracey Crouch: My constituents like it when I call them, Mr Vaizey.

Mr Vaizey: Do you have any evidence for that?

Tracey Crouch: Yes.

Chair: She is here.

Mr Vaizey: I certainly would think they enjoy your tweets, Ms Crouch, which are always entertaining, particularly the one of you impersonating an aeroplane in an empty Portcullis House.

Tracey Crouch: You have not yet read the tweet I have done about this session, Minister.

Mr Vaizey: I think I will avoid that if I possibly can.

Chair: I think that probably is an appropriate note on which we should draw this session to a close. Thank you very much.

Prepared 17th September 2013