Ofcom opened an investigation into TalkTalk and Tiscali UK in July 2010 following complaints from over 1,000 consumers.
Ofcom found that both companies had wrongly issued bills to consumers for services they had not received, in particular to consumers who had closed their accounts. They did so in just over 62,000 cases between 1 January and 1 November 2010. Ofcom issued both with a legally-binding notification in November 2010 and set them a deadline of 2 December 2010 to take steps to sort out their billing problems.
However, while TalkTalk and Tiscali UK did take some important steps to comply with the rules, such as making changes to their customer records management systems, they still incorrectly billed almost 3,000 consumers between 2 December 2010 and 4 March 2011.
Ofcom has therefore issued TalkTalk and Tiscali UK with a financial penalty to reflect the seriousness of their breach of the rules and to act as a deterrent to them and other telecoms companies who must comply with the rules.
TalkTalk and Tiscali UK were also required to take steps to remedy the harm they caused to consumers by 2 December 2010, for example, by paying refunds to affected customers.
TalkTalk and Tiscali UK have paid over £2.5 million in refunds and good will payments to over 65,000 affected consumers.
Ofcom is able to fine companies which breach telecoms rules of up to 10 per cent of their relevant turnover. Ofcom considers this to be a serious breach of the rules. However, Ofcom is issuing TalkTalk and Tiscali UK with a lower penalty than they might otherwise have been given, had they not taken steps towards complying with the rules, and taken action to remedy the harm they caused to consumers.
The fine is payable to Ofcom and passed on to HM Treasury. TalkTalk and Tiscali UK are required to pay it within 30 days of receiving the penalty notification.