The High Court has ordered Virgin Media to amend its training manuals to ensure that financial incentives to its agents for successfully dissuading customers from switching to another TV, internet and phone service provider do not breach an EU regulation.
Mr Justice Denis McDonald made formal orders on Wednesday in a case in which he found that Virgin, one of the State’s biggest service providers, had breached EU Universal Service Regulation obligations in the way in which its phone agents dealt with customers seeking to switch.
The judge, however, rejected a separate claim by the communications regulator, ComReg, that Virgin was also in breach of the regulations by requiring customers to give 30 days notice before terminating their contract. The court heard had ComReg been successful on this issue, it could have opened up Virgin to a potential multimillion euro liability in refunds to affected customers.
The judge also rejected Comreg’s argument that customers who phone up Virgin to cancel should be dealt with through a “two step approach”. This would involve the customer being first offered a choice to consent to listen to the agent’s “save (the customer from switching) activity” or go directly to cancellation without having to listen to it.
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In his judgment last month, the judge said that while Virgin argued the financial incentives to agents were for resolving customer issues, it was clear the event which triggered the payment of the incentive was the retention of the customer.
He said: “Not only are agents instructed through the manuals to take that approach but they are encouraged and incentivised to do so by the availability of financial commissions which are only payable where the agent succeeds in saving the customer”, he said.
Following submissions on Wednesday from Eileen Barrington SC, for ComReg, and Niall Buckley SC, for Virgin Media, on the formal orders to be made, the judge said he would make an order in relation to contract termination in accordance with wording suggested by ComReg, subject to amendment.
He said it would require that Virgin’s conditions and procedures for contract termination do not act as a disincentive to changing service providers. This will be done by amending its training manuals and associated documents to include, where relevant, materials in relation to financial incentives available to agents, he said.
He also ordered that where a customer wishes to cancel, it should be given effect as soon as the customer makes his or her intention clear. This would also apply in circumstances where it is clear the customer “does not welcome ‘save’ activity”, he said.
However, he said, this does not preclude an agent from asking a customer why they wish to cancel and, if the customer has a particular issue with the service, the agent is not prohibited from addressing that issue so long as they do not persist after it becomes clear the customer wants to proceed to cancellation.
He said the order does not prevent a financial incentive for an agent for resolving an issue if that is the reason the customer phoned up. This preserved the ability of Virgin to provide such incentives to agents in those circumstances, he said.
The judge said the retraining of agents should be carried out within an eight week period and that all new agents be provided with similar training. He was not persuaded that there should be an evaluation of the new procedures after six months.
In relation to costs, he said both sides had been partially successful in the case. However, he rejected Comreg’s claim that it should be entitled to 70 per cent of the costs because, it argued, that much of the case had been taken up dealing with the “saving” of the customer issue.
He said there were a number of other matters which took up time in the case including the very serious issue of the 30-day termination notice and for which ComReg had failed to prove its case.
In all the circumstances, he believed the success of either party on the issues was nearer to 50/50 and it seemed appropriate that there should be no order for costs. This means both sides pay their own costs.
