Vodafone UK will be fined £4.6 million by watchdog Ofcom for “serious and sustained breaches of consumer protection rules” which the operator blamed on a complicated IT migration.
This is the largest fine Ofcom has imposed on an operator.
The regulator completed two investigations: one that found Vodafone failed to credit the accounts of 10,452 pay-as-you-go customers when they topped up, and the second related to failure to adhere to Ofcom’s rules of handling customer complaints.
“Vodafone’s customer service agents were not given sufficiently clear guidance on what constituted a complaint, while its processes were insufficient to ensure that all complaints were appropriately escalated or dealt with in a fair, timely manner,” the watchdog said.
The pay-as-you-go issue resulted in a £3.7 million fine while £925,000 was imposed “for the flaws in its complaints handling processes.”
The money must be paid to Ofcom within 20 working days and will be passed on to the country’s treasury.
The final figure incorporates a 7.5 per cent reduction to reflect Vodafone’s agreement to enter into a formal settlement.
Lindsey Fussell, Ofcom consumer group director, said “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.”
Vodafone reimbursed all pay-as-you-go customers who were impacted, except for 30 it could not identify, and made a donation of £100,000 to charity.
The operator said “we deeply regret these system and process failures” and explained that the matters under investigation “were a consequence of errors during a complex IT migration which involved moving more than 28.5 million customer accounts” that began at the end of 2013 “and was the largest of its kind ever undertaken by Vodafone anywhere in the world.”
It said individual customer accounts were incorrectly migrated, leading to mistakes in the customer billing data and price plan records stored on the new system.
It also conducted a full internal review, overhauled management control and escalation procedures, and will invest an additional £30 million this year in customer service and training, including hiring an additional 1,000 new UK-based call centre personnel.
Last summer, Ofcom imposed a £1 million fine on UK operator EE over its failure to comply with regulator rules on handling customer complaints.