Broadband and landline customers to get £142m payout in auto compensation scheme
Ofcom expects to implement the scheme in early 2019.
Customers of major broadband and landline providers including Sky and BT are set for payouts totalling £142 million as part of a new compensation scheme for poor service.
Users will now see their accounts automatically credited if they experience slow repairs, missed appointments or delayed installations, without having to chase companies for redress.
The scheme is the result of a review by Britain’s industry watchdog Ofcom, which has said that many people are not receiving services to the standard they expect, or are failing to be adequately compensated when that service falls short.
Companies including BT, Sky, TalkTalk, Virgin Media and Zen Internet have agreed to introduce the scheme, which is expected to come into force in early 2019 following a 15-month implementation period.
Plusnet and EE have also indicated that they intend to take part.
Alex Neill, managing director of home products and services for Which?, said that it is “vital” that all of Britain’s broadband and landline providers “play fair and sign up for this scheme”.
Currently, only 15% of cases where customers suffer from slow, delayed or missed repairs and appointments receive compensation and Ofcom says that even then, it is “only in small amounts”.
It estimates that customers receive an average of £3.69 per day for loss of service, and just £2.39 per day for delayed installations.
The new initiative will see customers receive £25 per missed appointment in the case that an engineer fails to show up or cancels with less than 24 hours’ notice, while customers who fail to have a new service installed on a particular start date will be credited £5 for each day it is delayed.
For those facing slow repairs after reporting loss of service, customers will receive £8 for each day that it is not fully fixed – after an initial waiting period of two working days.
Based on the average number of incidents involving poor service each year, Ofcom has estimated that consumers will be compensated an extra £126 million per year, on top of the £16 million that is currently doled out annually for redress – bringing financial payouts to around £142 million annually.
Lindsey Fussell, Ofcom’s consumer group director, said: “Waiting too long for your landline or broadband to be fixed is frustrating enough, without having to fight for compensation.”
She added: “People will get the money they deserve, while providers will want to work harder to improve their service.”
The industry watchdog said it will “closely monitor” the scheme and conduct a review within one year of its launch. If it fails to work for consumers, Ofcom has promised to “step in”.
Small and medium-sized businesses are also set to benefit from the compensation programme, with Ofcom set to introduce new rules that will ensure they are given clear and detailed information outlining the level of quality they should expect.
It is just the latest attempt to reform the industry, after the watchdog last month put forward proposals that would allow broadband customers to more easily walk away from contracts without penalty if the speed falls below a minimum level.
The right to exit would apply to contracts with phone or pay-TV services bought by households alongside broadband.
Ofcom said it expects to publish a final decision on those improved codes of practice early next year.