Notice to Industry: Administrative charges from 1 September 2011
17 August 2011
Following a recent review of its approach to setting administrative charges, PhonepayPlus has concluded that the method for setting the charges will remain as they are under the current Code of Practice (11th Edition, Amended April 2008). They have however been updated to reflected the latest budget and cost allocation arrangements. These charges will apply to cases opened on, or after, 1 September and will be in line with our
Notice of 1 April 2011
, which set out details as to how cases would be handled during the transition from the 11th to the 12th Edition of the Code of Practice (‘the Code’).
The administrative charge system was introduced in September 1992 to ensure that service providers found to be in breach of the ICSTIS (as PhonepayPlus was formerly known) Code of Practice made a proportionate contribution towards the costs incurred in bringing their cases to a conclusion. This principle continues in the Code at paragraph 4.10:
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.
PhonepayPlus retains the right to review charges as, and when, required, and the new administrative charges mark the conclusion of PhonepayPlus’ most recent review.
The new charges
The new administrative charges reflect the current PhonepayPlus budget and associated new team structures. In particular, the change in charges is a result of a reduced Investigations Team and the implementation of the Complaints Resolution Team that deals with low-level consumer harm informally. These changes mean that cases coming before the Code Compliance Panel (‘CCP’) Tribunals are likely to involve more serious consumer harm and are likely to be more complex in nature. This increased complexity is reflected in the CCP rate.
The calculations of the hourly charge rates include the direct cost of personnel involved in bringing each case to a conclusion. They also include a proportion of overheads (such as rates, rent and electricity) that can be fairly attributed to those personnel.
All methodology, which remains the same for the new administrative charges, has been previously checked by PhonepayPlus’ auditors, Mazars LLP, to ensure that they are appropriate and reasonable.
The hourly charge rates were calculated using our 2011/12 budget and will apply to all
investigations that begin from 1 September 2011:
Code Compliance Panel Tribunals
Per Adjudication Tribunal case
Per Oral Hearing Tribunal half-day
Per Oral Hearing Tribunal full-day
Per Emergency procedure consideration
Per application for a review
Per Case Management Direction
|Staff (charges per hour)
|Head of Investigations
|Director of Operations
|Chief Executive Officer
|Head of Legal
|Head of Industry Support
|Per secondary cases
|Informal representations (per 1/2 hr)
Please note that all charges are exclusive of VAT.
How the administrative charge is calculated
The administrative charge is calculated by adding the CCP Tribunal case/matter costs to the staff costs per hour detailed above.
A simple illustration of how the costs could be calculated is as follows.
||5 hours @ £85 = £425|
|Head of Investigations
||1 hour @ £122 = £122|
|CCP Adjudication Tribunal case
||Per case = £2,322|
Charges for the CCP Tribunals include only the direct costs associated with members’ time and costs in preparation for and attending Tribunals.
The total administrative charge, which is referred to the Tribunal for a recommendation, will be determined by the complexity of the case and the hours spent by PhonepayPlus personnel in bringing the case to a close, as well as the cost of all secondary cases received.
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.
All disbursements relating specifically to a case will also be charged to the provider (including external legal costs and, where appropriate, counsel’s fees).
In addition, where expert reports have been obtained, PhonepayPlus will seek to recover these costs, subject to the Tribunal’s recommendation as above.
Informal representations and oral hearings
As outlined above, informal representation and oral hearings incur set charges plus any other direct costs incurred by PhonepayPlus. Should a request for an informal representation or an oral hearing be subsequently cancelled by the provider, the provider will be charged for all costs incurred by PhonepayPlus up to the time of cancellation. In addition, an hourly charge will be applied for the time which had been allocated or set aside by PhonepayPlus for the informal representation or oral hearing prior to its cancellation.
The administrative charge process
- The letter of adjudication sent to any Network operator or provider found to be in breach of the Code will include an administrative charge invoice. Where we are awaiting notification of external legal costs, the administrative charge invoice will be forwarded under separate cover.
- Payment terms are 10 days.
- VAT will be applied to all charges.
- Payment by installment is not permitted.
- Non-payment of the administrative charge is usually considered to be a serious breach of the Code of Practice and may result in the imposition of further sanctions.
- 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.
- If a relevant party considers that an administrative charge invoiced to it is excessive, paragraph 4.10.5 of the Code allows that party to challenge the level of the administrative charge by requesting a review in accordance with the process set out under paragraph 4.7 of the Code.
Date of application of the new charges
The new hourly rate charges will apply from 1 September 2011.
For the avoidance of doubt:
- Cases opened up to, and including, 31 August 2011 will have current administrative charges applied.
- Cases opened on, or after, 1 September 2011 will have the new administrative charges detailed in this Notice applied.
The critical date for determining which administrative charge regime applies is the date on which an investigation is formally opened by PhonepayPlus.
The hourly charge rates will be updated annually on 1 April, based on the then current year’s budget, unless otherwise determined by PhonepayPlus.