Ofcom Continues TalkTalk/Tiscali Probe

TalkTalk and Tiscali have coughed up millions in goodwill payments after wrongly billing customers

TalkTalk and Tiscali UK have paid almost £2.5 million in refunds and good will payments to thousands of consumers who were incorrectly billed for cancelled services, according to the regulator Ofcom – and the investigation is continuing as complaints are still arriving.

More than 1000 Tiscali customers complained to Ofcom, after TalkTalk bought Tiscali, over incorrect bills. Ofcom opened the investigation in July 2010 and, in November, gave the two entities until 2 December to comply with the UK’s telecoms rules which prohibit communications providers from billing customers for services that haven’t been provided.

Refunds were issued

The ISPs took action to remedy the situation, including refunding consumers and issuing goodwill payments, and Ofcom was unable to impose a financial penalty.

“TalkTalk and Tiscali UK have taken significant steps to fix the problem and to comply with the regulations by the deadline set, in direct response to Ofcom’s action,” said the regulator. “These steps include identifying and compensating some 62,000 affected consumers. On this basis, Ofcom is not in a position at present to impose a financial penalty on the companies under our current legal powers.”

However it warned that the Government is currently consulting on changes to the law. Under these changes, Ofcom would be able to issue a financial penalty for breaches of the regulations, regardless of whether a company subsequently took action to address the problem.

Ongoing Complaints

According to a PA report, one customer received a bill of £109.77 from TalkTalk after she had moved to another service provider. Another customer paid Tiscali UK £610 despite cancelling her account in February 2006, after being sent bills from debt collection services.

And Ofcom said that despite the actions taken by TalkTalk and Tiscali UK, it is still receiving some complaints from consumers. “In light of these and information obtained from the companies, Ofcom will continue its investigation into their compliance with the regulations,” it said.

“If the investigation reveals that TalkTalk or Tiscali UK have continued to breach the regulations, they could still face further enforcement action including a financial penalty,” it added.

Tough Period

It has not been a good quarter for the service provider. TalkTalk revealed in early February that it had lost 25,000 customers to rival broadband  providers during the last quarter, due to problems migrating former Tiscali customers onto its billing system.

In the final three months of 2010, TalkTalk’s total broadband customer base shrank from 4.3 million to 4.2 million. And the ISP also announced a “major re-organisation” of its business operations, which will result in the loss of approximately 580 jobs.

The customer loss at TalkTalk is in marked contrast to that of fierce rival BT, whose profits in the last quarter were boosted by a strong broadband performance thanks to the addition of 188,000 new broadband customers.

TalkTalk had revealed back in January 2010 that it was formally dropping the Tiscali brand name after its £236 million acquisition of Tiscali back in May 2009.