MPs accuse Oftel of failure to help consumers

Pressure on Ofcom to deliver

Oftel the former UK telcoms regulator - has been slammed for failing to do enough to help customers.

In a scathing report Helping consumers benefit from competition in telecommunications, the House of Commons Public Accounts Committee found that consumers are confused about the services and tariffs offered by telcos.

Although MPs hit out at BT for its "unacceptable" dominance of the sector, they also rounded on the former regulator, claiming that it failed to do enough to help consumers.

The committee contrasted the Oftel's efforts to other industry regulators - such as gas and electricity watchdogs Ofgem and Energywatch - which encouraged consumers to switch supplier to get a better deal.

And it called on Oftel's successor, Ofcom, to do more to tell consumers about the opportunities and risks of switching, and to draw public attention to the savings available from switching supplier.

The MPs said : "Oftel was remote from consumers and did not do enough to help them."

"Oftel claimed to place the consumer at the heart of its work, yet adopted a hands-off approach to consumer information."

The report reveals that Oftel set aside a fraction of its annual budget (just £45,000 from £19.5m) to help consumers make informed choices about their phone supplier.

The MPs said: "Where the market is complicated and changing rapidly, however, there is a greater, rather than a lesser need for the regulator to understand consumer needs."

Committee chairman Edward Leigh MP, said: "…Oftel is remote from consumers and spends only a tiny slice of its budget on external publicity. Oftel must back up its claims to place the consumer at the heart of its work by disseminating guidance on how to identify the best supplier and drawing public attention to the savings available from switching."

BT, which is "hopping mad" at the findings of the report, rejected the idea that the regulator should take a more active role in persuading punters to switch providers.

"BT doesn't accept that Ofcom should actively encourage people to switch suppliers. Its [the regulator's] key role is to ensure that consumers have a wide choice of supplier and that there are no barriers to entry."

Ofcom welcomed the report saying that the issues raised were already being examined as part of the regulator's strategic review of the sector.

"If there is a problem then it will be addressed," said a spokesman.

Industry response to the report has been swift. The Broadband Industry Group, which lobbies for greater competition, said: "It is clear that in the telecommunications market, from fixed-line to broadband, BT’s dominance is still stifling the potential for innovation and consumer choice.

“Ofcom now has the opportunity to deliver where its predecessor struggled and provide an environment in which the full benefits of competition can take effect. Without decisive action consumers will lose out and the only winner will be BT."

John Pluthero, chief exec of alternative telco Energis, said: "It would have been helpful to have this report when Oftel was still around. The point now though isn't whether Oftel failed or not - the point is whether or not Ofcom will succeed." ®

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