Vodafone UK admits to ‘process failures’ after Ofcom imposes record £4.6M fine

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Vodafone UK was in contrite mood on Wednesday after it admitted that “system and process failures” caused a breakdown in customer service that meant thousands of pay-as-you-go subscribers could not use their mobile phones even after topping up.

According to Ofcom, which is fining Vodafone UK a total of £4.6 million (€5.1 million/$5.6 million) for the failures, 10,452 pay-as-you-go customers lost out when Vodafone failed to credit their accounts after they paid to ‘top-up’ their mobile phone credit. The affected customers collectively lost £150,000 over a 17-month period between December 2013 and April 2015, the regulator added.

A second investigation by Ofcom also found that Vodafone failed to comply with its rules on handling customer complaints in the period between Jan. 1, 2014 and Nov. 5, 2015. Of the total fine, £925,000 related to the flaws in the operator’s complaints handling processes.

Matthew Howett, who leads Ovum's regulatory advisory service, noted that this is Ofcom’s largest ever fine for a telecoms operator and warned that it is reflective of a more “aggressive stance” being taken by the regulator “to protect the consumer with larger fines designed to act as a deterrent.”

Vodafone conceded that a series of errors led to these customer failures, and blamed the situation on a “complex IT migration which involved moving more than 28.5 million customer accounts and almost one billion individual customer data fields from seven legacy billing and services platforms to one, state-of-the-art system.”

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The operator said the IT project began at the end of 2013 and was the largest of its kind ever undertaken by Vodafone anywhere in the world. However, it noted that a “small proportion of individual customer accounts were incorrectly migrated,” leading to mistakes in the customer billing data and price plan records stored on the new system.

These errors in turn eventually caused a sharp rise in customer complaints, which prompted Ofcom to investigate.

As part of measures to put matters right, Vodafone said it has fully refunded or re-credited 10,422 customers out of the 10,452 affected -- it was not able to track down the other 30. The average refund per customer was £14.35, it added.

It also noted that the IT failure involved was resolved by April 2015 with a system-wide change implemented in October 2015.

“This has been an unhappy episode for all of us at Vodafone: we know we let our customers down. We are determined to put everything right,” Vodafone said.

Lindsey Fussell, Ofcom’s consumer group director, said: “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.”

Vodafone UK was still the most complained-about mobile operator in the UK during the second quarter of 2016, according to Ofcom figures.