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Changes to PhonepayPlus Code of Practice and statement following consultation on the 13th edition of the Code

PhonepayPlus is today publishing its 13th Code of Practice and a limited number of immediate changes to the current 12th Code of Practice. These immediate changes have been made in response to the High Court’s recent judgment on the use of the Emergency Procedure in 2013 and, as explained below, are also being included in the 13th Code of Practice. Please click here to download relevant documents.

Ofcom has signalled that the 13th Code proposals meet the tests set out in the Communications Act 2003 and given them provisional approval subject to scrutiny by European Union member states and the European Commission. PhonepayPlus has also been working in collaboration with Ofcom on the changes relating to the 12th Code.

The publication of the 13th Code of Practice follows an 18 month process of review and consultation. In consideration of feedback from the PhonepayPlus Board, the industry, and Ofcom, PhonepayPlus also announces today a review of the investigations, adjudications and appeals process contained in the Part 4 of the current Code. PhonepayPlus is also undertaking a review of the previously proposed rule 3.12.3 which had been intended to cover spoken pricing in audio visual advertising and will be consulting on Guidance and Special conditions.

The 13th Code of Practice
The Department for Business, Innovation and Skills will lay the Code before the European Commission for comment, before final sign-off later this year. Subject to any comments, the 13th edition of the Code will take effect on 1 July 2015.

Industry members who responded to the 13th Code consultation supported most of the proposals. The key changes that you will find in the 13th Code and described in the accompanying statement are:
• A new rule requiring providers to possess any qualifications and/or licences necessary in law before operating a PRS.
• An updated rule around the requirement not to take advantage of vulnerable consumers.
• The removal of any spending caps currently contained within the Code or prior permission regimes – with the amounts and actions associated with them to be set outside the Code.
• The raising of the “forced release” cap on live chat and sexual entertainment services from £30 to £45 per call (incl. VAT) – with requirements to inform consumers clearly when they have spent £15 (incl. VAT) and require them to clearly opt in to continue when they have spent £30 (incl. VAT).
• The raising of the single purchase cap, and monthly subscription cap, on Children’s Services from £3 to £5 (incl. VAT), and a new purchase cap for Children’s Services of £20 (incl. VAT) per service in any given billing cycle.
• The removal of a requirement for all PRS to supply and promote a non-PRS UK phone number for consumer enquiries (but to maintain appropriate and effective free or low-cost complaints processes).
• The introduction of Special conditions to apply to defined higher risk service types – these will replace existing “prior permissions” regimes.

Immediate amendments to the 12th Code of Practice
Following the High Court judgment in the recent legal case brought by Ordanduu and Optimus Mobile, Ofcom has conducted a review to ensure that PhonepayPlus takes all necessary actions to address the problems identified in that judgment and to ensure that they do not re-occur.
As a result of this review, Ofcom and PhonepayPlus have agreed that certain limited safeguards should be inserted, with immediate effect, into Rule 4.5 (Emergency Procedure) of PhonepayPlus’ 12th Code. Ofcom has approved PhonepayPlus’ 13th Code on the basis that it also includes these safeguard amendments.

The amendments made are to paragraphs 4.5.1 and 4.5.2 of both the 12th and 13th Code editions. Paragraph 4.5.2 has been removed in its entirety and paragraph 4.5.1 has been amended. To see the changes, please click here.
Related projects

PhonepayPlus is undertaking further work in response to views expressed during the consultation on the proposed 13th Code:

1. A review of the investigations, adjudications and appeals procedures (Part 4)– PhonepayPlus will undertake a comprehensive review of this part of the Code together with its “Investigations and Sanctions Procedures”. We are operating as a regulator in a changing market and legal landscape, in particular in relation to EU law. As part of this review, we will take into account feedback from the PhonepayPlus Board and from the industry on our proposed changes to Part 4 in last year’s consultation on the proposed 13th Code. We will also consider further the Emergency Procedure provisions in the Code.
This review will commence immediately. While the review may recommend changes to the provisions currently found in Part 4 of the Code, those changes will not be made before the 13th Code takes effect. Any proposed Code changes will be developed and then fully consulted on in a separate Code amendment project once the conclusions and recommendations of the review are known. We will ensure that stakeholder views are sought and reflected throughout the review.

2. A review of spoken pricing in audio visual advertising – This follows views raised by some respondents that the current Code’s requirement for promotions on television or other audio visual formats to clearly state pricing information visually and orally if the service costs more than £3.83 (excl. VAT) no longer meets the legal tests for inclusion in the Code.
This provision has existed in Codes since we consulted on the matter in 2004. We have removed it from the 13th edition of the Code to be submitted to the EU, pending further review of whether such a provision is appropriate in light of all the legal tests.
That review is ongoing. Subject to it, PhonepayPlus intends in due course to consult on the possible amendment of the 13th Code, to re-introduce a requirement in this area.

3. Consultation on Guidance and Special conditions– In light of the planned introduction of Special conditions to apply to defined higher risk service types, which will replace “prior permissions”, PhonepayPlus will consult on the proposed scheme for Special conditions and on changes to some existing Guidance in support of the Code. This consultation will be issued shortly.

4. A factsheet setting out the number ranges and tariffs under PhonepayPlus’ remit – This is in order to clarify which number ranges, and which parts of number ranges depending on individual tariffs, will fall under PhonepayPlus’ regulatory remit once Ofcom’s review of Non-Geographic Call Services is implemented in July 2015. This factsheet will also set out PhonepayPlus’ expectations in terms of compliance for providers of services using each different number range and/or tariff, and will be released shortly.

For more information and to download the relevant documents please click here.

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