Industry News

AIME Board and Executive were taken by surprise with the PhonepayPlus news this morning that Paul Whiteing, the CEO of five years and the Director of Strategy prior to that, is to stand down in May this year to take up a lead role in the Financial Ombudsman Service.

AIME worked with Paul and his team extensively over the years, including deep involvement with the development of the regulatory 12^th Code of Practice and its subsequent implementation. We found his pragmatism and reasoning to be strong and he was always ready to listen to industry participants, Board Members and the AIME Executive.

We are sorry to see him moving on and hope that we are able to establish an equally  strong working relationship with his successor. We will continue to engage positively with PhonepayPlus during the transition time and provide our full co-operation to Jo Prowse while she stands in as Acting CEO.

AIME Chairman Edward Boddington said: “Paul had a very tough role bringing PhonepayPlus into the modern world of the digital services explosion, transitioning to a principles based code and developing a culture where industry innovation could occur while ensuring consumer protection is top priority. I have worked with him for many years and I congratulate him on his new role in the financial services industry where he can carry over his extensive experience of the PRS industry.”

 

 

Following a successful pilot period, PhonepayPlus has set out its plan to make regular text donation to charities easier. Following consultation with Industry, PhonepayPlus has announced a Statement of Application applying to registered UK charities providing fundraising via a premium rate text shortcode on an on-going subscription basis.

For charities operating subscription-based premium rate SMS donations, this Statement:

– Permanently dis-applies rule 2.3.12(d)(v) of the PhonepayPlus Code of Practice (twelfth edition);

– Allows the use of SKIP facility so that subscribers can text SKIP to miss a given month’s subscription payment without opting out of the on-going donation entirely;

– Provides an exemption from the requirement to seek permission where donations exceed £4.50 in any given 7-day period.

UK registered charities and intermediaries working with them that operate or wish to operate premium rate subscription SMS donations should read the conditions set out within in the Statement.

You can view the full document relating to the changes here.

On 1 April, the Financial Conduct Authority takes over regulation of consumer credit from the OFT. If you have an OFT licence then the FCA will have written to you to tell you to register with them before 31 March. If you want to carry on offering credit to your customers and haven’t registered with the FCA for ‘interim permission’ you may be acting illegally.

What’s happening?

The Financial Conduct Authority (FCA) takes over regulation of consumer credit from the OFT from 1 April, this year.

Which firms need to take action?

All firms with an OFT licence must contact the FCA to register for ‘interim permission’. This allows firms to continue providing credit to customers. If your business sells goods or services on credit, you almost certainly need to be licensed by the OFT.

What do firms need to do?

Consumer credit – three step plan for firms with up-to-date OFT licences
Register for interim permission – click here www.fca.org.uk/clicked
Pay the online fee – £350 for most firms and £150 for sole traders
Wait until the FCA contacts you to apply for full authorisation.
The FCA will be publishing its final rules on how it intends to regulate consumer credit before April. You can sign up for emails to get the latest news from the regulator here.

What happens if you don’t do anything?

If you have an OFT licence and don’t register with the FCA by 31 March 2014, you cannot legally continue with consumer credit related activities in April.

If you haven’t got an OFT licence but think you should have one.
You should apply to the OFT. After 1 April, you will have to register with the FCA.

What are the consequences of providing credit without an OFT licence or authorisation from the FCA in the future?

This is likely to be a criminal offence and it may mean that agreements you make are unenforceable.

What about if you introduce customers to lenders?

This is one of the areas that is likely to change when the FCA takes over. If you introduce individual customers to businesses that are lenders – credit brokering – you will have to be authorised by the FCA in the future.

PhonepayPlus, the regulator of premium rate services (PRS) in the UK, has today published a research paper focusing on the consumer experience of PRS and other micropayments called Understanding Consumer Journeys: Premium rate service and micropayment markets.

A full copy of the research can be found on the PhonepayPlus website.

PhonepayPlus stated that the aim of the research was to gather feedback from consumers who had used premium rate services, about their experiences in obtaining information about the services they had used and in resolving any issues that they had with their bill containing PRS.

The findings from Understanding Consumer Journeys aim to identify and quantify any issues and allow PhonepayPlus to assist the PRS industry to improve the consumers experience.

 

Highlights from the study, conducted by Jigsaw Research, found that:

– Over a quarter (26%) of those who contact PhonepayPlus make seven or more contacts about their issue with organisations without resolution, and another 37% have made contact between three and six times.

– On average, complainants to PhonepayPlus have been charged £32.14 by the PRS they complain about.

– 62% of PhonepayPlus complainants held the company behind the service responsible for their issue, a further 33% consider that their phone provider is responsible.

– A mystery shopping exercise revealed that many users would have difficulty getting through to the provider of the service.

– The mystery shopping exercise also showed that users contacting their phone network would not be put at ease by that contact.

 

The research also found several positives:

– The number of unnecessary complaint journeys have reduced and become somewhat more straightforward since the previous research in 2009.

– 59% were satisfied with PhonepayPlus handling of their complaint

– There were examples of good practice amongst the industry’s own customer services

In a statement released today by PhonepayPlus, they encouraged a joint approach throughout the market towards improving the consumer experience when using premium rate services.

AIME will provide a briefing document for Members summarising the research.

 

The OFT has published its finalised Principles for online and app-based games.

In April 2013, the OFT announced the launch of an investigation into the ways in which online and app-based games encourage children to make purchases. The OFT investigated whether there was general market compliance with consumer protection law, in particular the Consumer Protection (from Unfair Trading) Regulations 2008 (‘CPRs’), the Unfair Terms in Consumer Contracts Regulations 1999 (‘the UTCCRs’) and the Electronic Commerce (EC Directive) Regulations 2002 (‘the ECRs’). The OFT explored whether online and app-based games included commercial practices that may be considered misleading, aggressive or otherwise unfair under that legislation.

The OFT considered that a set of Principles would be the most helpful and proportionate approach to address the concerns the OFT identified during their consultation because they clarify their view of the entire industry’s obligations under consumer protection law. The concerns OFT has articulated are:

– a lack of transparent, accurate and clear up-front information relating, for example, to costs, and other information material to a consumer’s decision about whether to play, download or sign up to a game
– misleading commercial practices, including failing to differentiate clearly between commercial messages and gameplay
– exploiting children’s inexperience, vulnerability and credulity, including by aggressive commercial practices
– including direct exhortations to children to buy advertised products or persuade their parents or other adults to buy advertised products for them
– payments taken from account holders without their knowledge, express authorisation or informed consent.

The Competition and Markets Authority will, once it acquires its powers in April 2014, pick up from where the OFT has left off in respect of children’s online games.