The customer always pays when regulators impose fines on firms
We are sold a particular package offering specific download and upload speeds and bandwidth but we seem to have ongoing problems getting what we have been led to believe we were paying for. Indeed, oftentimes the providers will sell us a package that they know that they cannot deliver at all or on a sustainable basis.
Invariably, when we complain, the providers offer excuse after excuse. In some cases, they will even charge us for putting us back on to our old package if we haven’t complied with the terms of the package.
This week, it was reported that a judge had imposed a fine of €16,500 on Eir’s holding company, Eircom, for its failure to connect telephone lines to a convent nursing home which had no connection for a three-week period. Eircom had overcharged the home and had also misinformed it about the need for a new line.
For those of us who sought and obtained a telephone connection 40 or so years ago, a three-week delay in getting a connection would have been a godsend. In those days, an 18-month delay would not have been unusual. Expecting companies to deliver on their commitments is very much to be welcomed. Earlier this week it was announced that BT will incur a huge bill of £342m (€395m) in Britain for delays incurred in installing high-speed cabling for its wholesale customers such as Vodafone and Sky.
The bill includes a £42m fine imposed by British watchdog Ofcom for breaking rules on how customers should be treated if it failed to deliver on time. BT also used loopholes to avoid or reduce the amount of compensation it paid and it is estimated that correcting this will cost BT £300m. And there we thought that it was only consumers who were being taken advantage of.
Interestingly, Ofcom, which had been investigating these issues at BT since 2015, has also fined BT £300,000 for providing inadequate information to the regulator.
There are lots of lessons for us on this island to be learned on how the UK regulators deal with their brief.
But there is another more fundamental issue arising from both the BT and the Eircom cases: Who exactly pays these fines and compensation?
The management of these companies either made a decision on how their customers should be treated or alternatively their highly paid executives did not put effective operating procedures in place to ensure that their customers were treated properly.
We have yet to hear how the executives who made such decisions are being dealt with. Have they been sanctioned? Have their bonuses been reduced or even taken back? Or, are their structures so opaque as to make it impossible to find who actually was responsible?
For most of us, however, the issue that arises from these fines is who exactly pays them. In the absence of any information to the contrary, we can be fairly sure that ultimately the customers will pay.
Sure, the money will come from the companies’ coffers. But lest their shareholders are overly upset or remunerations affected, a way will be sought to increase charges on the consumer to maintain the status quo.
Such charges should correctly come from the bottom line and the companies accounts should clearly show these. Regulators should be mandated to ignore any demand for increased charges where such increases are based on inappropriate activities or actions by the company.
