Ofcom has announced new rules that will see broadband customers receive automatic compensation for a “loss or reduction of service.”
The new proposal for an Automatic Compensation System was announced this week, and lays out how fixed line phone and broadband ISPs will be required to provide either a cash payment or bill credit to consumers for service disruptions.
While business customers currently benefit from a Service Level Agreement (SLA) which usually includes some sort of provision for compensation in these instances, ISPs are currently not required to compensate those without the pricier contracts.
Ofcom’s Strategic Review, which came before this week’s proposals and is now part of the Government’s Digital Economy Bill 2016-17, initially laid out plans for all consumers to be compensated for service issues.
The telecoms regulator says the new proposed system for compensation will offer “incentives for providers to improve service quality.“
Under the proposals, ISPs would have to compensate customers who suffer “slow repairs, or missed deadlines or appointments”.
As a statement from the regulator explains: “Customers would be entitled to automatic compensation, without having to go through a potentially lengthy and difficult claims process, whenever:
- their landline or broadband is not fixed quickly enough after it has stopped working; or
- their new landline or broadband service is not up and running on the day promised; or
- an engineer doesn’t arrive for an appointment as scheduled
Lindsey Fussell, Ofcom’s Consumer Group Director, said: “When a customer’s landline or broadband goes wrong, that is frustrating enough without having to fight tooth and nail to get fair compensation from the provider.
“So we’re proposing new rules to force providers to pay money back to customers automatically, whenever repairs or installations don’t happen on time, or when people wait in for an engineer who doesn’t turn up. This would mean customers are properly compensated, while providers will want to work harder to improve their service.”
The regulator estimates that the plans would mean up to 2.6 million additional landline and broadband customers could receive up to £185m in new compensation payments each year.
Under the proposals, compensation payments would be set by Ofcom. Here’s how it breaks down:
On top of all that, Ofcom is proposing that all small and medium-sized enterprises (SMEs) should benefit from “clearer, more detailed information upfront about the service on offer.”
A consultation on the proposals is open until June 5, with Ofcom set to publish its decision statement towards the end of the year.
Ofcom says BT, Sky and Virgin Media have responded to the propoals with a joint draft proposal to introduce “automatic compensation through a draft voluntary industry code of practice.”
However, the regulator says the proposal fails to meets its concerns, so there will likely be a lot of discussion over the plans before they’re implemented.
Let us know what you think of Ofcom’s plans in the comments.