Investigation into Onestream’s compliance with mis-selling and slamming rules

Following our investigation, Ofcom has today issued a Confirmation Decision to Onestream under s96C of the Communication Act 2003 (the “Act”) for contravening the rules set out under GC C7.3(a). Ofcom and Onestream entered into a settlement process and Onestream wrote to Ofcom 3 December 2019, admitting its liability in relation to the nature, scope and duration of the contravention.

In light of the evidence and Onestream’s admissions, Ofcom is satisfied that between 13 April 2018 and 25 January 2019 (the Relevant Period) Onestream contravened GC C7.3(a) for almost ten months by Slamming at least 118 customers, many of whom were elderly and/or vulnerable. It did this in the following ways:

1. making cold calls to customers without making it clear to them that Onestream was an entirely separate phone company who was trying to switch their home phone services from their current phone company to Onestream. We have found that for at least 45 of the 118 customers, Onestream engaged in Slamming by attempting to switch them without ever obtaining the customer’s express permission to do so; and
2. by putting in place and implementing a policy, to make repeated attempts to switch customers to Onestream without contacting them each time to seek permission to switch them. This was despite customers asking their current phone company to cancel the previous attempt by Onestream to switch them. We have found that Onestream did this in the case of at least 113 of the 118 customers.

GC C7.3(a) protects consumers from Slamming which is one of the most extreme forms of mis-selling. Failure to comply with these rules amounts to a serious contravention and can cause significant harm to consumers, including stress, anxiety, financial harm, as well as the time and effort that consumers spend trying to resolve the situation. In this particular case the harm was magnified because a significant proportion of the customers affected were elderly and/or vulnerable and because for at least 113 customers, Onestream made repeated and systematic attempts to switch their home phone services.

In light of the seriousness of this case, the Confirmation Decision imposes a financial penalty of £35,000 on Onestream in respect of its contravention of GC C7.3(a). The penalty also includes a 30% discount from the penalty that Ofcom would otherwise have imposed, on account of Onestream’s admissions of liability and its agreement to enter into a settlement.

In setting the penalty, we have had regard to our penalty guidelines. The penalty reflects a number of factors including the harm suffered by customers, the objective of deterrence as well as the seriousness of the contravention. We also took into account the recklessness with which Onestream acted by not having in place effective and compliant policies and procedures which led directly to the contravention.

We have also taken account of the fact that Onestream co-operated fully with the investigation and took proactive steps to remedy the consequences of the contravention. These steps included writing to all customers that were switched to Onestream as a result of a telesales call to inform them of their right to exit their contract without penalty at any time, regardless of whether they were the subject of this investigation. Onestream has also now ceased outbound voice sales.

In addition to the remedial steps that Onestream has proactively taken, it is now also required to proactively refund any money paid to it by any of the 118 customers we have identified as being Slammed and to inform any of those 118 customers that are still with it, of their right to exit their contract without penalty.

The penalty imposed on Onestream is near the maximum penalty we could impose, which is 10% of a company’s annual turnover.  Had Onestream been a bigger company with a higher turnover, the penalty could have been set at a higher level. Penalties must act as effective deterrents to prevent further contraventions from companies like Onestream and other companies. It is important that CPs take compliance with their regulatory responsibilities seriously, monitoring relevant processes and policies appropriately to ensure that contraventions of the rules do not occur in the first instance. This also means that when things go wrong, they can act quickly and responsibly to stop the contraventions and to remedy any potential harm.

A non-confidential version of the Confirmation Decision is currently being prepared and will be published shortly.

Following consumer complaints that Ofcom received about Onestream and consideration of information provided by Onestream in response to Ofcom’s initial enquiries, Ofcom has decided to open an investigation into Onestream’s compliance with GC C7 (which replaced General Condition 22 (GC22) on 1 October 2018). GC C7 places obligations on communications providers in relation to switching, including mis-selling and slamming. Specifically, GC C7.3 states that when selling or marketing communications services, the gaining provider must ensure that, in particular:

“(a) it does not engage in Slamming;

(b) any information it provides to the Switching Customer is accurate and not misleading about:

(i) its Relevant Communications Services….”

The investigation will examine whether there are reasonable grounds to believe whether Onestream has failed to comply with its obligations under GC C7. We aim to complete our evidence gathering phase in this investigation by March 2019.