£750,000 penalty is first in watchdog’s crackdown on silent and abandoned calls

Home insurance and repairs company HomeServe has been fined £750,000 by Ofcom for making too many silent and abandoned calls to UK customers.

The telecoms watchdog started investigating HomeServe last year as part of a programme to reduce the shock caused to consumers by silent and abandoned calls. Ofcom is not investigating any more insurance companies about this.

The Ofcom fine follows a self-imposed £10m bill by HomeServe in November last year to restructure the business after it mis-sold insurance policies, while in February the firm announced that it was cutting 200 jobs.

The Ofcom probe found that HomeServe exceeded its abandoned call rate on 42 separate occasions between 1 February and 21 March 2011, with an estimated 14,756 calls being made to consumers.

Ofcom also revealed that HomeServe had made around 36,218 calls that broke the watchdog’s ban on companies making repeat calls to the same number within the same 24- hour period, where a call has been identified by automated technology as having been picked up by an answer machine.

First hefty silent calls fine

The hefty fine is the first of its type Ofcom has given under the revised Communications Act 2003, which increased the top level of fines from £50,000 to £2m to companies that break rules on silent and abandoned telephone calls.

Before fining HomeServe, Ofcom weighed up the steps taken by the company to comply with the act and its offer to compensate consumers who suffered harm from receiving silent and abandoned calls as a result of its breach of the rules. HomeServe has agreed to pay affected customers £10 each.

Silent calls can be upsetting because people may not understand what has caused them and might think they are being targeted or stalked, especially if they get several such calls.

Silent and abandoned calls come from automated systems known as diallers and answer machine detection (AMD) technology.
Dialler systems, which are mainly used in call centres, automatically dial telephone numbers and connect the consumer to agents as soon as the phone is answered.

AMD technology disconnects calls made to answer machines before they are put through to call centre agents, which can make call centres more efficient.

However, AMD technology can also end a call when a person has answered because it has mistakenly identified the call as being picked up by an answer machine.

One of the biggest problems happens when dialler systems generate more calls than can be answered by call centre agents; therefore, these calls are silent when picked up.

Calls were outsourced

A HomeServe spokesman said that the offending calls were made by an outsourced supplier and that HomeServe discovered the problem in an internal audit of its telemarketing. The spokesman added that HomeServe reported the breach to Ofcom and stopped using the problematic AMD technology.

HomeServe’s fine is payable to Ofcom and passed on to the Treasury. The company is required to pay it within 30 days of receiving the penalty notification.

Ofcom consumer group director Claudio Pollack said: “Our rules are there to prevent consumers suffering annoyance, inconvenience or anxiety from silent or abandoned calls. We hope today’s fine will send a strong message to all companies that use call centres that they need to ensure they are fully compliant with the rules.”

HomeServe said it did not expect the fine to have a “material impact” on its financial results.

We say …

● Companies making silent and abandoned calls should be wary of Ofcom’s increased powers to dole out fines of up to £2m, a significant increase from the £50,000 top fine that existed before 2010.
● The HomeServe fine is another example to insurers of the importance of checking supply chains, because although the original fault came from an outsourcer, HomeServe had to pay the bill.
● The outcome also shows that all automated dialling technology should be checked to ensure it is compliant, as the rules had been in place long before HomeServe’s internal audit detected the error.