http://www.thisislondon.co.uk/news/business/articles/timid397581?source=

Dial 0870 and get ripped off!
Sean Poulter, Consumer Affairs Correspondent, Daily Mail,
31 January 2005
BANKS and power companies have been accused of making big money out of customers who ring their call centres. Many callers forced to use 0870 or 0845 numbers do not realise that the firm they are phoning takes a slice of the call charge.

Ofcom, the body which regulates the communications industry, said the banks and utility companies are 'confusing' and 'misleading' customers.

The watchdog warned that firms which use the premium numbers may be further milking customers by keeping calls on hold for longer than necessary - pushing up the price of the call and the profits to be made.

Ofcom wants curbs on the way banks and other users of premium numbers describe their phone lines. In particular, it wants to stop the practice of 0870 numbers being advertised as 'national rate' and 0845 numbers as 'local rate' - when in fact charges are higher than for national or local calls.


Phoning 0870 and 0845 numbers can cost nearly three times as much as a national or local call. Ofcom said it has been flooded with complaints from consumers who feel they are victims of a scam.

Banks, power companies, businesses and even State bodies have introduced the numbers claiming that they are convenient and easy to remember. In reality they are expensive to dial, largely because the firms involved receive a rake-off from the call charge.

An Ofcom spokesman said: 'Consumers find the local rate and national rate descriptions of 0845 and 0870 numbers are confusing and potentially misleading. Consumers are also concerned that 08 numbers appear to be proliferating as more expensive alternatives to geographic telephone numbers. They are concerned that organisations may keep callers on hold unnecessarily because of the money they receive.'


The use of customer phone calls to generate profits has also angered senior MPs. Former Labour minister George Mudie, a member of the Commons Treasury Select Committee, said: 'The banks are unbelievable. Every time you look at a different aspect of their operations, they are always looking to extract more money from their customers' pockets.'

He called for his committee to investigate call centre charges, adding: 'Given the huge scale of the profits they are making, I think they will be back to us after the election to explain this.'


Calls to 0870 numbers cost 7.91p a minute, with around 2.5p of that going to the organisation receiving the call. The 0845 numbers are meant to reflect 'local' rates, and cost 4p a minute. Firms that employ 0845 numbers get benefits which can include payments equivalent to 0.5p a minute on the calls.


The rise of the 0870 and 0845 numbers means most home phone users are paying more for their calls than they should. The extra call costs may be only a few pennies for each customer, but the sums involved are huge when related to all phone users and businesses.


It is estimated that consumers spent £1.5bn in 2004 calling 0870 and 0845 numbers - almost £1 in every £5 spent on all landline phone calls.


Henry Ejdelbaum, of accountants the AIMS Partnership, which has protested about the numbers to Ofcom and the Department of Trade and Industry, said: 'The bottom line is that there is no apparent reason why anyone should choose to offer an 0870 number when dealing with customers except to make money. The use of 0870 numbers by public services, for which we already pay an ever-increasing amount of tax, is invidious.'


Chris Williams, of Uswitch.com, a price comparison website, said: 'The fact that firms usually get a cut of the call charge means there is a financial incentive to keep customers on the phone for as long as possible.'


BT said it is not profiting from 0870 and 0845 numbers because most of the charge goes to the firms providing the phone service to the organisation concerned.


• The Treasury Select Committee is to question the heads of Halifax and the Royal Bank of Scotland tomorrow over the banks' cash machine network, concentrating on the spread of ATMs that charge for giving out money and fears that charges are hidden from customers.