Ofcom investigates Virgin Media's business practices

Virgin Media is not letting customers leave, according to a raft of consumer complaints that has led Ofcom to open an investigation into the telco’s business practices.

The UK telecoms regulator is not noted for intervening in the market, so the announcement that it is probing Virgin Media of its own volition comes as something of a surprise. Specifically, it is looking at the operator’s compliance with contract termination and complaints handling rules.

It is at the information gathering stage at present, but has promised updates as the investigation progresses, noting that if it finds Virgin Media in breach of the rules it could issue a fine and order the company to take remedial action.

Ofcom said it is concerned about the number of complaints it has received from Virgin Media customers saying they had tried to switch provider, but that Virgin made it difficult for them to leave. Problems ranged from inability to get through on the phone to speak to an agent, to dropped customer care calls, lengthy periods on hold, and the telco’s failure to action customer instructions. As part of the investigation, Ofcom said it will also look at whether Virgin is meeting its requirements on complaints handling.

As the regulator points out, Virgin Media scored below average on call waiting times and satisfaction with complaint handling in its most recent customer satisfaction report. However, Virgin itself was keen to highlight that it actually fared better in that report than it did the previous year, and is adamant that customer care is improving.

“Complaint rates relating to ‘difficulties leaving’ have halved over the past year, showing the progress we’re making, and we will keep working with Ofcom throughout its investigation, while making further improvements in how we handle customer complaints to provide a better overall experience,” a company spokesperson said.

That may well be the case, but to an extent the damage has already been done.

Even the allegation that Virgin Media is making it difficult for customers to leave is “a very bad look for the UK’s third-biggest broadband provider, particularly in the midst of a bitter cost-of-living crisis,” said Alex Tofts, broadband expert at price comparison service Broadband Genie.

“If Ofcom’s investigation finds the company in breach of its rules the damage to its reputation is likely to far outweigh any fine,” he said.

Tofts notes that Virgin is at greater risk of losing customers wanting to cut their bills than many of its rivals because of its focus on fibre and the related high cost of many of its plans. He also points out that, in addition to the aforementioned Ofcom figures on call waiting times, Virgin Media’s “website’s help section on billing and payments is also tough to navigate with no live chat or phone number.”

That comment alone is unlikely to do much for the telco’s reputation, the outcome of the investigation notwithstanding.

On the subject of the cost-of-living crisis, which will impact many telecoms operators, not just Virgin Media, Ofcom is also leaning more heavily on telcos to up their game on providing and promoting social tariffs.

In April the regulator disclosed that just 5.1% of those eligible for social tariffs – more affordable Internet plans for those on low incomes, that is – had signed up for them; that’s around 220,000 households out of 4.3 million. Thus far, Ofcom’s approach has been to encourage operators to do the right thing, and its latest salvo essentially involves more such urging, coming as it does in the form of a (not particularly strongly worded) letter from its chief executive Dame Melanie Dawes to the various telco CEOs. It’s not going to act though, at least not yet. It will “monitor progress on social tariffs very closely,” and update at the end of the year.

Making it easy for customers to switch to cheaper plans – social tariffs or otherwise – is a key tenet in Ofcom’s handling of the cost-of-living crisis, and one it reiterated in its announcement on the Virgin investigation.

Holding customers hostage – allegedly – is an interesting approach to customer retention and one that could see Virgin Media get a slap on the wrist once the probe is complete.

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