Ofcom fines Vodafone £4.6m for 'serious and unacceptable' customer service failings

More than 10,000 pay as you go customers were left out of pocket because of the mobile giant's failures

The telecoms regulator Ofcom has handed Vodafone a record £4.6m fine for failures in handling customers' complaints and for poor service to pay-as-you-go mobile customers.

The regulator found that 10,452 of Vodafone's pay-as-you-go customers collectively lost £150,000 pounds over the 17-month period to April 2015. In addition Vodafone, the world's second largest mobile operator, failed to identify or address the problems and only acted after Ofcom intervened, and the company's customer service agents were not given proper guidance as to what constituted a complaint, the regulator found.

£925,000 out of the £4.6m fine was levied for failing to handle customer complaints effectively, the remaining £3.7m being for the pay-as-you-go issue.

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

"Phone services are a vital part of people's lives, and we expect all customers to be treated fairly and in good faith. We will not hesitate to investigate and fine those who break the rules."

Vodafone said it deeply regretted the failures and that it had refunded the vast majority of the affected customers, with all but 30 having been fully reimbursed or re-credited an average amount of £14.35. It has also donated £100,000 pounds to charity.

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

Vodafone is the UK's most complained about mobile provider. In March Ofcom said Vodafone was the only provider to have more complaints than the industry average of 10 per 100,000 customers.

The company has been beset by problems over the last few months including a botched migration of customer data into a new customer relationship management (CRM) system which saw sales fall 10 per cent and which may have been behind the pay-as-you-go failings.

"The matters under investigation were a consequence of errors during 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," the company says on its website.

Last November Vodafone was hit by a hacking incident where the accounts of almost 2,000 customers we accessed.

Commenting on the fine, Matthieu Clauzure, brand and marketing manager at customer experience specialist CCA International, said

"Providing a poor, or non-existent, service is bad enough; to compound this by hampering customers' ability to complain after the event is unforgiveable."

He added: "Organisations should now take this as a wake-up call; even if their own activities are whiter than white, they should still make sure that their complaints procedure is sufficient. After all, a near-million-pound fine is still no drop in the ocean."

Mike Davies, VP EMEA at customer communication management specialist GMC Software, said:

"While not every company will suffer flaws in its billing system, they will all have to deal with customer complaints at some point. To ensure they avoid Ofcom's attention, they need to make sure that customers are given information on their rights in a consistent manner across all channels, and that they can record every instance of when, how and to whom information is sent."