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Review of PhonepayPlus Investigations, Procedures and Sanctions (Part 4 Review)

13 May 2015

PhonepayPlus publishes today the Terms of Reference for the Review of its Investigations, Procedures and Sanctions, Part 4 of the Code of Practice.

As previously announced, PhonepayPlus will undertake a review of the investigations, adjudications and appeals procedures (Part 4) of the Code together with its “Investigations and Sanctions Procedures”. As part of this review, we will take into account feedback from the industry on our proposed changes to certain aspects of Part 4 in last year’s consultation on the proposed 13th Code. We will also consider further the Emergency Procedure provisions in the Code.

This review is already underway. While the review may recommend changes to the provisions currently found in Part 4 of the Code, those changes will not be made before the 13th Code takes effect. Any proposed Code changes will be developed and then fully consulted on in a separate Code amendment project once the conclusions and recommendations of the review are known. We will ensure that stakeholder views are sought and reflected throughout the review. To read the Terms of Reference please see below.

Terms of Reference


This review of Part 4 of the PhonepayPlus Code will ensure that:

  • PhonepayPlus’ regulatory framework, effectiveness and capability are maintained;
  • all decisions are procedurally and substantially fair, transparent, robust and defensible;
  • stakeholder confidence is retained and;
  • its vision and aims in terms of consumer protection and a healthy, innovative and compliant market are achieved.

The review will identify where the regulatory framework, which underpins enforcement of the Code, and the internal and external capability, processes and controls which support this, could be revised, and to make clear recommendations for any improvement. In doing so, the review will help build better industry and stakeholder understanding and confidence in our enforcement framework and procedures.

The recommendations from the review of Part 4 will form the basis for consultation on the fourteenth edition of the Code of Practice.


The Part 4 Review project team will:

  • conduct a review of the investigations, adjudications and sanctions procedures currently contained within Part 4 and associated Annexes of the PhonepayPlus Code of Practice, and the internal procedures which support this, in order to, where required, strengthen the efficiency, fairness and independence of our processes.
  • consult upon and seek approval for a fourteenth edition of the Code of Practice with revised Part 4 provisions.

The focus of the project team will be on the following core areas:

i. Independence – the relationship of the Code Compliance Panel (CCP) to the PhonepayPlus Board, including the composition of the CCP;

ii. Transparency and certainty – the current structures and mechanisms around the Track 2 and Emergency investigations procedures, including the use of mechanisms to withhold outpayment of service revenues to the providers under investigation;

iii. Fairness – in relation to the structure and operation of all current adjudication and appeals processes, including the current Oral Hearing and Independent Appeals Body (and access to the same), and in relation to compliance with the requirements of European and domestic law;

iv. Proportionality and consistency – in relation to decisions of the Executive and CCP Tribunals, including the types and levels of sanctions imposed;

In addition to the above areas the project team will also consider the following operational matters that will play an important role in ensuring that PhonepayPlus is able to make lawful, sound, fair and proportionate decisions; these will not form part of the public consultation on the fourteenth edition of the Code:

v. Capability – the Executive skillsets and resources (and its advisors) in all areas of investigation and enforcement and understanding of the relevant public law and European law requirements;

vi. Procedures – the development of relevant processes, templates and documentation in investigation, monitoring, notification and adjudicatory procedures (including KPIs);

vii. Quality assurance – controls, safeguards and sign-off procedures.

The output of the review will be recommendations in respect of the core areas that will form the basis for revision of Part 4 of the Code of Practice. The project team will also offer recommendations on the additional areas, which are aimed at ensuring all of Phonepayplus’ mechanisms and processes for the implementation and operation of a revised Part 4 of the Code remain fit for purpose. In making its recommendations, the project team will also consider stakeholder perceptions of current and future processes, and the impact of any recommendations upon PhonepayPlus in terms of cost and resources.


The Part 4 Review will begin by 6 April 2015 and be complete, and recommendations delivered to the Board, by 31 August  2015 with a view to consultation in September 2015.

Consultation and approval for fourteenth edition of the Code of Practice

Following approval of the recommendation by the PhonepayPlus Board, the recommendations will follow the usual Code review consultation and approval procedures. It is anticipated that following consultation and approval the fourteenth edition of the Code of Practice will come into force in 2016.

Annex to Terms of Reference/Success criteria

The outputs of the Part 4 review are expected to be:

  1. A revision of the Code of Practice which incorporates a new and updated Part 4 of the Code.
  2. Associated PhonepayPlus procedures on the operation of Part 4

The Review will have been successful if the following criteria are met:

  1. The revised Code and procedures have addressed concerns raised in the O&O judicial review and by industry and are now robust enough to stand the test of a legal challenge in that they are lawful, sound, fair and proportionate (as far as can reasonably be judged in the absence of a challenge).  The revised Code and procedures will have regard to principles of good regulation (proportionality, accountability, consistency, transparency, targeting)
  2. Ofcom will be able to approve the Code and procedures with reasonable confidence that it will lead to regulatory and enforcement outcomes that offer effective consumer protection, but without being unduly restrictive or burdensome on industry.
  3. Industry will have had sufficient opportunity to provide evidence and views and will as a result be able to be reasonably confident that these have been taken into account and that when implemented, the new Part 4 and procedures will lead to regulatory and enforcement outcomes that are fair and transparent.

The Review will have been conducted in a timely manner that allows for informal consultation with stakeholders including industry, a formal consultation on the proposals for a new Code to be published in September 2015 and for the implementation of the new Code and procedures in early 2016.