Industry Research : Citizens Advice Urges Cold Calling Ban after Ofcom Study
Claims management companies and other financial services firms should be banned from cold calling consumers, said Citizens Advice, after telecoms regulator Ofcom revealed that eight in 10 households are regularly receiving nuisance calls.
Data from a panel of 850 householders who kept a diary of calls for four weeks showed that 82% received unsolicited calls, at an average of two a week.
Firms offering to make PPI claims made up 22% of the calls, or 51% of identifiable unwanted recorded calls. Energy, market research and insurance were next on the list of the most common causes of unwanted calls, followed by "pension predators", companies that offer early access to retirement funds in exchange for a big fee.
Reacting to the findings, which cover a period in January and February, Citizens Advice chief executive, Gillian Guy, said: "People are being hounded in their homes by unscrupulous financial firms. "Without a ban on cold calling for financial services people are at risk of losing some of their pension to scams or paying upfront fees for services that don't deliver. A ban on cold calling will make it clear that if you are still contacted out of the blue then it is a scam or a service not to be trusted."
The charity's own research over roughly the same period this year revealed that, of a sample of 1,845 complaints about financial services to the Citizens Advice consumer service, 35% of cases had evidence of cold calling, out of the blue texts, letters and spam emails. Over the same period, 97% of cases involving pension unlocking services and 56% involving PPI claims management firms stemmed from cold calls.
Instead of a ban, Ofcom said it would open an investigation into the claims management companies behind the calls.
"Previously our enforcement action has concentrated on the bigger name companies," said a spokeswoman for Ofcom. "Now what we are seeing from the data we have collected is that it is smaller companies who are to blame for a lot of these nuisance calls, and we are now building up to a formal investigation into the claims management sector over this."
The statistics on PPI calls relate only to those calls where panellists were able to identify the product or service. The participants were only able to identify the name of the company in one out of every five calls and the number in one in every three calls.
A third of the calls received across the households were silent calls – those that are caused by automated systems known as diallers, which are used in call centres to generate and attempt to connect calls. If there are not enough call centre agents available to handle all of the successfully connected calls the person on the receiving end of the line is greeted with a silent call.
Ofcom has already taken action against major companies including TalkTalk and Homeserve over silent calls. Last month it fined TalkTalk for making an excessive number of abandoned and silent calls to potential customers.
Ofcom is advising households plagued by nuisance calls to sign up to the free Telephone Preference Service (TPS), which is designed to stop unwanted sales and marketing calls. However, the service is increasingly struggling to block nuisance calls, especially those that come from overseas call centres. Research by Which? found that TPS cuts out only a third of nuisance calls. iIn a recent interview with the Guardian, John Mitchison, who became boss of TPS last summer, was candid about the service's failings. "I would completely understand if the Guardian wrote a 'TPS is broken' headline," he said.
Ofcom said it is currently working on a joint initiative with the Information Commissioner's Office, which regulates recorded calls and text messages, and is set to make a further announcement on this shortly. It is expected to include action that should improve the Telephone Preference Service. It is also working with the Ministry of Justice, which oversees claims management companies.
Posted by Veronica Silva Cusi, news correspondent
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Published: Friday, May 10, 2013