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Regulator can chase liquidator over phone scam fine

Premium rate watchdogs score High Court victory

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A High Court judge has told the liquidators of a premium rate phone scam they can be sued over a huge fine levied by regulators before it went titsup in 2005.

PhonepayPlus, the watchdog formerly known as ICSTIS, won the right to sue for a debt of £1.9m, which covers a £1.3m fine it imposed on the now defunct Allied Communications, plus costs.

Accountants carrying out the liquidation of Allied Communications have now agreed to hand over a slice of the corpse of the defunct premium rate operator to the regulator.

PhonepayPlus said it doesn't know how much of the £1.9m it'll recover yet. In a statement it told The Reg: "The final settlement that will be granted to PhonepayPlus is now in the hands of the liquidators. PhonepayPlus expects that this process will take three to six months." It promised to make the figure public when it finds out.

UK firm Allied Communications was fined £1.3m plus costs in 2005 for being at the centre of a network of 16 dodgy autodialler rackets. Automated equipment would call unsuspecting marks to tell them they had won a fabulous cash prize or holiday, if they called back a high-priced winners' line.

Regulators used emergency powers to shut down the scams, but several months later had not received a penny of the punishment.

Allied Telecommunications then went into adminstration, leaving £921,000 cash. ICSTIS laid claim to scraps of the carrion, but the corporate undertakers UHY Hacker Young "resisted", so the case ended up in court this September.

The liquidators' arguments centred around the role in the original fine played by Ofcom and which regulator is responsible for enforcement. Mr Justice Walker of the Queen's Bench Division rejected this and other objections, and ruled that ICSTIS/PhonepayPlus has a right to sue for its share of Allied Telecommunications' cash.

The regulator and the liquidator have now agreed to agree on a suitable compromise.

PhonepayPlus said: "PhonepayPlus is determined that those that fail to fulfil their responsibilities, so causing financial harm to consumers and reputational harm to legitimate businesses, are held to account for their actions."

The liquidator was not available for comment.

The transcript of the High Court judgement is here. ®

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