Vodafone slapped with record fine over top-ups

Vodafone has been hit with the largest-ever fine for a British telecoms operator, primarily "for taking pay-as-you-go customers’ money without providing a service in return", says the communications regulator.

Ofcom handed down a penalty of £4.6m, of which almost £3.7m was related to IT errors that led to more than 10,000 clients paying for top-ups that were never credited to their account.

The regulator said the company "also failed to act quickly enough to identify or address these problems" and only acted "after Ofcom intervened".

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Previously the biggest fine for a telecoms firm was the £3m levied on TalkTalk in 2011 over billing errors following its take over of the Tiscali UK business in 2009, reports the Daily Telegraph.

The Guardian adds that Ofcom's largest ever fine was the £5.7m for ITV in 2008 over "abuse" of premium rate phone lines used for competition entries.

Vodafone's problems stemmed from the move to a new billing system in 2013, says City AM.

Errors in the process meant "inactive" sim cards were no longer disconnected if they were not used or "topped up" for 270 days.

Sim cards were held in "pre-disconnection state" for much longer than their normal 24-hour period and the company continued to accept top-up payments, even though these were not being credited to accounts.

In all, 10,452 customers were affected to the tune of £150,000. All but 30 have been fully compensated, with a donation of £100,000 made to charity on behalf of those the company has been unable to "track down".

A second investigation led to a fine of £925,000 for Vodafone's poor complaint handling, with staff not trained as to what constituted a customer complaint and claims not handled in a timely fashion.

Vodafone has for some time been the most complained-about mobile network in the UK, with the move to the new system seeing customer claim volumes doubling to three-times more than its nearest rival.

A spokesperson for the firm told The Sun it "deeply regretted" the past issues and it has seen a drop in complaints of 50 per cent since last November.