Ofcom’s revised guidelines on fines – a new emphasis on deterrence

Posted: March 17, 2016

Ofcom has published revised guidelines1, which set out how it determines the level of its fines across all areas that it regulates, including telecoms, broadcasting and postal services.  The revised guidelines, which took effect from 3 December 2015, will be applied to future investigations.

On the face of it, the amendments are incremental.  But the accompanying statement2 suggests that Ofcom is looking to provide a greater deterrent effect by imposing heftier fines in future in appropriate cases (most likely in the telecoms sector).

Ofcom also hopes that increased fines will reduce overall numbers of complaints.  This is, however, perhaps optimistic in the social media age, when it is easier than ever for consumers to complain and, indeed, consumer complaints on issues that have widespread impact or appeal can gain traction and multiply exponentially.

For broadcasters, it is questionable whether the revised guidelines will have any material impact.  It has long been clear that Ofcom does not consider itself bound to cap fines imposed on broadcasters at the level of financial harm.  Non-financial harm in a broadcast context is difficult, if not impossible, to quantify.  So Ofcom has always had a substantial margin of discretion when setting the level of any fine to be imposed on a broadcaster.  Broadcasters have also been aware for many years that, while fines imposed in previous cases were a factor that Ofcom would take into account, those fines would not operate as a cap on future fines.  In any event, it is extremely difficult to draw meaningful comparisons between the fines imposed by Ofcom on broadcasters, as they are almost invariably fact-specific.  In addition, there are different caps that apply to the fines that can be imposed on different broadcasters, which adds to the difficulty of making comparisons.

While Ofcom’s penalty guidelines apply across all areas that it regulates, it is perhaps of some comfort to those regulated by Ofcom that the revised guidelines will not be a “one-size-fits-all approach”, and that it does not intend simply to uplift all fines across the board for all types of breaches in all sectors.

Overall, the potential impact on larger entities in any of the Ofcom-regulated sectors may be significant, and Ofcom’s 2015 consultation and statement suggest that the revisions to the penalty guidelines are directed particularly at the telecoms sector.  But as Ofcom concludes in its statement (rather stating the obvious): “A provider can avoid the costs of a contravention and what it claims is the inevitable passing-on of those costs to consumers by avoiding the contravention in the first place.”

Eleanor Steyn, Associate, Michael Simkins

To read the full article, click here.  Article written for Entertainment Law Review.

 

 

 

[1] http://www.ofcom.org.uk/about/policies-and-guidelines/penalty-guidelines/.
[2] http://stakeholders.ofcom.org.uk/consultations/penalty-guidelines-15/statement/.