Levy announcement 1 april 2010-31 march 2011

5 March 2010

Following consultation with industry and approval from Ofcom, PhonepayPlus has confirmed its budget for 2010/11 will reduce by 3%.

As a result, PhonepayPlus has announced that its levy for 2010/11 will be 0.21%. The levy applies to all outpayments payable by network operators to service providers in respect of revenue generated by premium rate services. The levy is calculated as a proportion of every outpayment to ensure that PhonepayPlus continues to receive adequate funding to carry out its activities, as required by Section 121 of the Communications Act 2003.

This year’s levy is a substantial decrease on last year’s rate of 0.48%. However, the decrease is due to the impact that PhonepayPlus’ enforcement action has on its funding. In 2009/10 PhonepayPlus has continued to focus its investigations and enforcement work on the services that cause the most consumer harm. This has subsequently led to an exceptional level of fines being raised by the independent Code Compliance Panel on premium rate service providers who have been found in breach of the PhonepayPlus Code of Practice. The success in collection of these outstanding fines means that PhonepayPlus is able to offset this income against the costs of regulation for the wider industry, resulting in a much reduced levy requirement in the coming financial year.

It is important to note that PhonepayPlus does not expect this level of fine income to continue; in fact it believes the tough action taken this year should lead to greater compliance in the market and a related fall in fines levied going forward. The recently reported 62% fall in consumer complaints about premium rate services also underlines that the market is becoming more compliant.

Given this likely trend downwards in fine income, it is important that the industry understands that the levy requirements for 2011/12 are likely to increase. The graph below shows the non-adjusted levy requirement for the last few years and projecting for the next period. This non-adjusted rate would be the levy PhonepayPlus would need to raise if it did not receive any other income (such as fines, administration charges or bank interest) and is relatively stable, as it relates the total PhonepayPlus budget to the size of the regulated market. The adjusted rate is the amount PhonepayPlus is required to levy once the costs of regulation are offset by other income. As this amount is subject to great variation, the actual rate levied can appear to change dramatically from year to year. Further information on how the PhonepayPlus levy is calculated can be found in our consultation document on our business plan and budget.

 Business Plan and Budget 2010/11 consultation.


Click here to view Business Plan and Budget 2010/11 consultation.

This consultation has now closed.

Arrangements as to the payment, adjustment and auditing of the levy are set out in Annex 1 to the PhonepayPlus Code of Practice.

PhonepayPlus will shortly publish its full statement following its consultation on the 2010/11 Business Plan & Budget.