TIO Annual Report 2004/05

Ombudsman’s Overview

The highlights of the last 12 months have been the rapid increase in complaints to the TIO and debate about how the Scheme should develop in response to the pressures of convergence.

The general experience of complaint handling bodies is that complaints tend to increase over time. They also increase in complexity. In the case of the TIO a third dimension is the continuing high rate of complaint escalation. This refers to the process whereby the TIO decides to raise a complaint to the next of four tiers of investigation. Another way of describing this process is that it is a measure of failure of the TIO member to resolve the complaint at an early stage. Five years ago, the escalation rate was approximately 7% – that is 7 out of every 100 complaints was escalated – this year the escalation rate was closer to 10%.

Several factors influence complaint rates. The most important are industry dynamics – the level of competitive and other industry activity – and consumer awareness of the existence and role of the TIO. We conduct biennial surveys of public awareness, the last being in 2004, and it is probable that awareness of the TIO is fairly static. So, it seems that the primary driver of complaints over the past year has been industry activity. This influence is evident across the traditional reporting areas of fixed line, mobiles and internet, although there are unmistakable surges in some areas, for example, mobile faults, premium SMS and broadband.

Increasing complaints, and complaint rates, are often seen as a measure of consumer confusion, or dissatisfaction and this is broadly true. In another sense, however, complaints to the TIO and the complaint escalation rate are a measure of the direct costs to members of consumer dissatisfaction. These costs need to be reined in by members.

Whether described as an ADR or complaint handling scheme, the TIO is primarily a reactive body and there are limits on the extent to which the TIO can be proactive. Put another way, there are constraints on the TIO’s ability to influence the conduct of Scheme members to reduce the flow of complaints. Considerations of both effectiveness and efficiency, however, demand that the TIO either test or extend these limits.

In the coming year, the TIO will pursue three broad initiatives to increase its effectiveness and efficiency.

First, refining its investigation procedures to both emphasise to members the importance of early resolution of the majority of complaints and also to investigate more serious matters in greater depth.

Second, with the agreement of Council and the Board, to implement a new and more sophisticated systemic complaints investigation procedure.

Third, to give greater emphasis to the role of Member Communications in advising members about basic complaint handling procedures and techniques.

Coming to grips with the idea of convergence is sometimes akin to wrestling with smoke, yet the reality of this development is now apparent. Broadly, we are seeing the coming together of media and telecommunications or the carriage and content of services. The detail, however, is less obvious. That is why the government chose to merge the principal industry regulators, the Broadcasting and Communications Authorities, while leaving the legislative framework of regulation untouched for the moment.

If the detail of convergence is not always obvious, one aspect is clear – the emergence of mobile premium content services. In this context, it is a great pity that the mobile carriers, each of which is a member of the TIO, chose to participate in the development of a new, industry based complaint mechanism without any notice to or discussion with the TIO.

This development is all the more puzzling given that the TIO Council, which represents the interests of both members and consumers, was itself developing a set of fundamental or key principles to guide the Scheme as convergence gathers pace.

One of the most important principles is that consumers should be able to bring a variety of complaints to the TIO in a way that increases the efficiency and effectiveness of complaint handling in the industry while reducing regulatory overlap and consumer confusion and discouraging forum shopping.

Council’s effort in developing these principles will have a twofold benefit. It will assist the Council in setting further policy prescriptions for the TIO, as well as looking at the proper limits of the Scheme. It will also benefit the Ombudsman in further developing the TIO’s operational focus as new complaint issues are raised by consumers.

John Pinnock
Ombudsman

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