Notice to Industry: Administrative charges from 1 April 2011

The administrative charges are applied to service providers and information providers (where a case has proceeded against an information provider) (‘providers') found in breach of the Code. The charges also apply to network operators (‘networks') that are found to be in breach of the Code.

The review of administrative charges will take place over the next few months and will include discussions with industry stakeholders on the methodology employed to calculate the charges. The administrative charges system is evidence of PhonepayPlus' ongoing commitment to provide effective and proportionate regulation to the industry based on the ‘polluter pays' principle.

Background

An administrative charge system was first introduced in September 1992 and was substantially altered in January 2008 from a fixed charge for a category of case (whether simple, standard or complex) to an hourly rate for investigations that more properly reflected the time and expense incurred by PhonepayPlus personnel in bringing cases to a conclusion. The fixed charges for adjudication panels and oral hearings remained in operation.

Code provisions

The relevant provisions of the eleventh edition of the Code dealing with administrative charges are to be found at paragraphs 8.12 and 9.2.6

8.12           "All service providers found to be in breach of the Code may be invoiced for the administrative and legal costs of the work undertaken by PhonepayPlus. Non-payment within the period laid down by PhonepayPlus will also be a breach of the Code and may result in further sanctions being imposed. PhonepayPlus may direct that the relevant network operator withholds and passes to PhonepayPlus the sum(s) due from the payments outstanding under the contract between the network operator and the service provider."

9.2.6           "All network operators on whom a sanction is imposed may be invoiced for the administrative and legal costs of the work undertaken by PhonepayPlus. Non-payment within the period laid down by PhonepayPlus will be a failure by the network operator to comply with its obligations under the Code and may result in the imposition of a further sanction direction."

These provisions are replicated in the Twelfth Edition of the Code in section 4.10, as below:

4.10        Administrative charge

4.10.1   “A relevant party found to be in breach of the Code may be invoiced for the administrative and legal costs of work undertaken by PhonepayPlus (‘the administrative charge’).”

4.10.2   “Non-payment of the administrative charge within the period specified by PhonepayPlus will be considered a breach of the Code and may result in further sanctions and/or legal action.”

4.10.3   “PhonepayPlus may instruct a relevant Network operator or Level 1 provider to retain revenue, and/or not to provide further numbers, until the administrative charge is paid.”

4.10.4   “PhonepayPlus may direct the relevant Network operator or Level 1 provider to pass any previously retained funds to it up to the value of the administrative charge owed.”

4.10.5   “If a relevant party considers that an administrative charge invoiced to it is excessive it may challenge the level of the administrative charge by requesting a review in accordance with the process set out at paragraph 4.7 above.”

Administrative charge rates

Hourly rate charges for investigations  

Personnel	Hourly Charge (£) 2011/12
Administrator	71
Investigations Executive	84
Head of Investigations	139
Head of Industry Support	127
Director of Strategy & Communications	239
Chief Executive	337
Head of Legal	165
In-house Lawyer	106

Fixed rate charges for Tribunals  

Per Adjudication Case	1,467
Oral hearing - per half day	3,060
Emergency procedure decision	240
Application to review an adjudication	320
Secondary case charges (per case)	20
Informal representations (per half hour)	165
NB All charges are exclusive of VAT

Notes on administrative charges

1. Charges for Tribunals include only the direct costs associated with Code Compliance Panel (CCP) members' time and costs in preparing for and attending the panels.
2. The total administrative charge, which is subject to the CCP’s recommendations to the PhonepayPlus Executive, will be determined by the hours spent by PhonepayPlus personnel in bringing the case to a close, as well as the cost of all secondary cases received.
3. All disbursements relating specifically to a case will also be charged to the provider (including external legal costs and, where appropriate, counsel's fees). It should be noted that:
   • The Administrator's costs of preparing papers for a Tribunal are included in the fixed charge for the Tribunal;
   • There is a separate Administrator's and photocopying charge in connection with the papers prepared for an Oral Hearing, as these are invariably substantial and cannot be estimated in advance; and
   • An Oral Hearing is clerked by a junior barrister appointed by the CCP whose fees are separately charged as a disbursement.
4. Informal representations to a Tribunal can be requested by a network or a provider for a period of half an hour, or an hour.
5. The CCP has clarified that it requires the Head of Investigations, PhonepayPlus’ In-house Lawyer and the Investigations Executive responsible for the case at informal representations. The attendance of these members of the PhonepayPlus Executive at informal hearings is reflected in the revised half hour charge.
6. The fee of £320 for an application to review an adjudication is payable on submission of the application. If the application is granted, the review itself will be charged on the ‘per adjudication case' basis, if the network or provider is found on review to be in breach of the Code.
7. The charge for secondary cases reflects the cost of receiving and logging a complaint as evidence for an investigation, the cost of keeping the complainant informed of the progress and outcome ofthe complaint, and the arrangements for a call charge refund when sanctioned.
8. At the time of raising breaches with a provider, PhonepayPlus will continue to instruct the provider's network operator to withhold an estimated administrative charge from revenue generated. This estimate will take into account all secondary cases received to date.

Cancellations

As outlined above, there is a charge for an oral hearing of £3,060 per half day. Should a request for an oral hearing be subsequently cancelled by the network or provider, the network or provider will be charged for all costs incurred by PhonepayPlus up to the time of cancellation. If the cancellation is made less than five working days before the hearing, the fixed charges for the hearing will apply.

The administrative charge process

1. The letter of adjudication sent to any network or provider found to be in breach of the Code will include an administration charge invoice. Where we are awaiting notification of external legal costs, the administration charge invoice will be forwarded under separate cover.
2. Payment terms are ten days.
3. VAT will be applied to all charges.
4. Non-payment of the administration charge is considered to be a serious breach of the Code, and
          may result in the imposition of further sanctions by a Tribunal.
5. If the administrative charge remains unpaid by a provider, the network operator will be directed to
          pass over withheld funds to meet the outstanding debt to PhonepayPlus. If the full debt is not
          satisfied, access will be barred to all of the provider's lines until such time as full payment is made.

Date of application

The above rates for all fixed charges applied from 1 April 2010, irrespective of the date the investigation commenced.