/ Technology

Who is really responsible for a company’s nuisance calling?

Nuisance calls

A whopping £350,000 fine has been issued to a Brighton-based company for making over 46 million nuisance calls. But shouldn’t the company’s directors be held accountable too?

According to the regulator, the Information Commissioner’s Office (ICO), millions of automated PPI claims calls were generated from an untraceable residential property in Brighton.

After more than 1,000 complaints, the ICO found that the Prodial Ltd failed to comply with the rules on the use of consumers’ personal data for marketing purposes, and issued its largest ever fine so far.

The company, however, was placed into voluntary liquidation by one of its directors. The ICO is now working with the liquidators to recover the fine; but this again raises the question of whether company executives should be held accountable for nuisance calls.

Nuisance calling firms

Last year our research found that over three quarters of people in the UK think that the director of a company should be held personally accountable if the company makes calls without the necessary permission. And when we asked the same question in Scotland, nine in 10 people want this too.

Now, as Ian pointed out today:

But enforcement action, such as this one, is commonly taken against the company, rather than an individual company director, meaning that some companies don’t treat compliance with the law around marketing communications as a board level issue.

This is why we want nuisance calls to be a higher priority within businesses.

Calling time on nuisance calls

We want a mechanism to ensure senior executives are accountable if their company fails to comply with the rules on unsolicited communications. Those individuals would have to ensure that the company’s practices are above board or face personal action.

In 2014, the UK Government asked Which? to a chair a taskforce on nuisance calls and texts. The taskforce set out a number of recommendations including:

‘The Department of Culture, Media and Sport, and the Ministry of Justice, should review the ability for the ICO to hold board-level executives to account who fail to comply with the rules and guidance on the use of consumers’ personal data for marking purposes, and amend legislation to give the ICO further powers as necessary.’

Now this record fine may bring executive accountability back on to the Government’s agenda again. But, at the very least, it certainly highlights the scale of the problem of nuisance calls.


So, do you think that company directors of nuisance calling firms should be held accountable?

Comments
Profile photo of DeeKay
Member

Yes, , directors of everything are immune to punishment, , Why is this???
Why is it that a limited company/corporation can have directors who are above the law yet the ordinary man in the street or businessman is held to account for everything no odds how slight

Profile photo of MrSofty
Member

unless they are at Least made to waste lots of there valuable time. they will never realise how much it disrupts disabled people waiting for a valuable call not the sales chatter.

Profile photo of duncan lucas
Member

Just do what the US +Canadian governments did and bring in proper legislation that acts in the interests of the people (99 % ) NOT BB !

Profile photo of Patrick Taylor
Member

The use of a company structure to avoid liability for what otherwise would be an offence is a problem. Though corporate manslaughter has been introduced the situation is still unsatisfactory as we know from the Banks and the failure to prosecute for dodgy dealings. The whole area needs to be re-examined as the failure of businesses and the re-purchase of its assets via quick sale to connected parties is yet another problem area.

As to this case the company has barely existed for more than a year and the Registered Address was a residential house in Brighton which was sold last August for £255,000 . I would tell you the names of the Directors but ICO do not show them and I am on the wrong computer to do a search.

Missing from this article is a link to the ICO press release as all the links just take you around Which? pages. I link to the judgement:
ico.org.uk/media/action-weve-taken/mpns/1623627/mpn-prodial-ltd-redacted-web-version.pdf

You may be distressed to note a £70,000 reduction in the fine if they pay early. The logic of giving the maximum amount rather than the acceptable lower figure one might put down to window dressing by ICO. Surely more honest to quote the £280,000 and record an increase for late payment?

One other point that is left in the air is that somebody is paying Prodial for the leads. Shouldn’t we be told which firms/people are encouraging nuisance calls?. A register of who uses who for the benefit of the population?

Prodial UK Ltd is an entirely separate firm currently dormant founded a decade ago. I thought I would add this to avoid potential for confusion. To be honest I thought ICO should have covered that point.

Profile photo of Lauren Deitz
Member

Morning Dieseltaylor, I’ve added that link into the third paragraph.

Profile photo of Ian
Member

Your point about the companies encouraging this sort of abuse is shrewd: if there were no financial incentives, these people wouldn’t be operating in the first instance.

Profile photo of Castle
Member

According to Companies House records, at the date of liquidation the company owed HM Customs & Excise £60,000 in unpaid VAT. This would suggest sales of at least £300,000.
The Liquidator has valued the company’s assets at just £6,383.

Profile photo of Ian
Member

And no government will grasp the nettle and make this behaviour a criminal offence.

Profile photo of Patrick Taylor
Member

DeeKay says
Yes, , directors of everything are immune to punishment, , Why is this??? Why is it that a limited company/corporation can have directors who are above the law”

This is actually a very fundamental and important construct of our society – what are companies. Going back a hundred plus years the concept was established that companies have a life of their own . There has been plenty of case law around this idea and effectively it can shield businessmen from actions and decisions which if they took as a sole trader or partnership they would be personally liable.

There is a valid argument for companies particularly where there are many investors/shareholders is that you can have scale which is something that was required when building the railways of England etc.

The shareholders appoint Directors to run the company on their behalf with control via the company Articles and the Companies Act. The Consumers’ Association Ltd is both a charity and a company and has [a rapidly reducing number of ] shareholders.

Profile photo of DeeKay
Member

Thanks DT
In my eyes there is a case to answer for many of these directors who are knowingly doing wrong in the knowledge that they can hide behind this cloak
The original intention of a limited company could not have been to protect a director from prosecution but has became protection to deliberate actions
My understanding of a limited company was to enable a business to set up with shareholders or backers be they singular or multiple a company such as the rail companies you mention so that if things went wrong creditors would have no claim on a single person be they director or shareholder should the business fold as such
The concept was pretty good for that purpose I’d say
If a company gets caught doing wrong and even the director/s had full knowledge they simply resign and walk away. . If the same company does not get caught the company and directors can reap the benefits in the knowledge that if the s**t hits the fan only the company can be made to pay. . .It’s not much of a system is it??
So should we all become limited companies??
Surely the sole trader/businessman is being treated unfairly
Could there be need for a change given the immensity of the banking scandal, VW etc whilst a sole trader who makes a simple mistake or even some employees who make simple mistakes can be pulled over the coals for their mistakes
Is this a case of the establishment backing BB??

Are my thoughts entirely wrong??

Member
Kay says:
25 March 2016

The Law was changed to enable the prosecution of individual company officers for Health and Safety offences, so why shouldn’t it be changed for other illegal practices?

Profile photo of bishbut
Member

Just to make sure directors get the message if legislation is ever brought in is to make the maximum sentence life in prison or no maximum one at all the minimum one must be imprisonment as well not a slap on the hand or a fine

Profile photo of duncan lucas
Member

IN this country directors are criminally responsible for the actions of their employees but whether any actual charges are brought is another thing . Break the law in the US and directors have a tougher time including imprisonment BUT the US bail laws favour those who are rich and also they can employ top lawyers to fight for them . I do agree with bishbut its time to get “US tough ” with them .

Profile photo of John Ward
Member

I wouldn’t agree with locking them up at public expense – they should be put to purposeful tasks and banned from ever again being in a managerial position or holding a directorship. First start prosecuting though . . .

Profile photo of Ian
Member

The current law is a minefield which makes prosecuting company directors for almost anything just about impossible. Interestingly, a company is viewed in law as a person, but that brings other complications with it.

This is the current CPS guidance on companies and prosecutions. There are many pages, so I’ve been somewhat selective. (NB. ‘Mens Rea’ is Intent)

Definition of Company

4. A company is a legal person, capable of being prosecuted, and should not be treated differently from an individual because of its artificial personality.

5. A company normally means a company registered under the current Companies Act 2006; or one or more of its predecessors cited in the Act; or equivalent legislation in another jurisdiction.

6. Unincorporated bodies (for example, partnerships, and clubs) may also be prosecuted where criminal liability can be established (see Archbold [2009] paragraphs 1-78 and 1-81b).

8. Prosecution of a company should not be seen as a substitute for the prosecution of criminally culpable individuals such as directors, officers, employees, or shareholders. Prosecuting such individuals provides a strong deterrent against future corporate wrongdoing. Equally, when considering prosecuting individuals, it is important to consider the possible liability of the company where the criminal conduct is for corporate gain.

9. It is usually best to have all connected offenders prosecuted together at the same time. However there are circumstances where the prosecution of a company will take place before the prosecution of connected individuals or vice versa. This may occur where there is going to be delay in initiating proceedings which could result in unfairness to one or more parties.

18. The leading case of Tesco Supermarkets Ltd v Nattrass [1972] AC 153 restricts the application of the principle to the actions of the Board of Directors, the Managing Director and perhaps other superior officers who carry out functions of management and speak and act as the company.

In essence, I suspect a change in the law would be required to make it an offence for any company director whose company was involved in illegal activity (such as the cold calling case mentioned above) to dissolve that company or to agree to the company being dissolved without consequence.

Member
dieseltaylor says:
28 April 2016

Thanks for that useful summary which I missed when first published.

I am beginning to think that what we have in the UK is all the apparatus to control various ills BUT without any will by the various bodies to really stick the boot in.

Now the question is whether this constant changing of the names and responsibilities for various quangos /departments is also part of the same game. Any activity that takes place is that of shedding a skin [ and the responsibility] of the current acronym rather than being active in solving problem areas.

I realise that Which? has been getting chummy with these bodies but I am feeling that perhaps a more antagonistic tone might be more, or at least as successful, whilst actually being more on the side of the nation.

It should be noted that the control of Which? is actually primarily in the hands of co-opted people from the business and quango sectors so perhaps that explains the current attitude on how the EU’s largest consumers association should act.

Member
P Hinton says:
3 March 2016

Yes please, because current deterrents are not working

Profile photo of RichardThomasMcGee
Member

Its not just in the cold calling sector that directors get out of their obligations by going into liquidation. This sort of thing has been happening in the building sector for years. Shoddy builders have performed outrageous work on some properties, then gone into liquidation to prevent them having to pay anything back.
It’s about time the Government clamped down on this practise and made all directors responsible for their company’s actions. After all, they don’t mind benefiting when the money is rolling in.

Member
Keith says:
8 March 2016

I think company directors should be responsible for all the company does. If they don’t wish to be then don’t be a director! Why should they be able to form another company to avoid the problems they have created?

Profile photo of Tom
Member

As the quoted example shows – large fines are meaningless given company law – the directors just liquidate the company, and start all over again with a different company.
They can then carry on with their cold calling until enough complaints are recorded for the ICO to take action and fine them again, only to repeat the process.
Directors will ensure their company worth is kept low so liquidation cost is minimised, and be happy in the knowledge that however large the fine they are immune to the impact.

Profile photo of JoyceDavies
Member

No one company or individual has the right to intrude into people’s homes like they. Do. it is 1120 on 10/3/2016 and already I have had 4 calls from numbers I do not recognise I ignore them then I check to see if message has been left, no such thing.With today’s technology I find it hard to accept that people can just pluck a number out of the air and then call on somebody,when you see the display showing a number I use to try and call them back to tell them to take me off their database, but guess what, the number is not available,The problem is that new technology is introduced without anybody having the foresight to see their would be obvious problems i.e nuisance calls

Member
John says:
10 March 2016

Yes!

Profile photo of Patrick Taylor
Member

An interesting and disturbing article on how the trickery of directors in Australia which exposes the similar problems they have – given the same basic concept of company law:
theconversation.com/the-ugly-story-of-dick-smith-from-float-to-failure-55625?

Fortunately this one is big enough to enrage their politicians and there may be fall-out. Amenable auditors are a problem . Perhaps the auditors appointment should be taken away from Directors and be done on rolling program from a slate and , of course, no consultancy work to be engaged in.

Until such time auditors are pretty much going to bow to those who pay their fees. Shame the auditors are no longer personally liable.

Profile photo of duncan lucas
Member

Its taken a while but I have been vindicated in that I have been saying for a long time on this issue that if GCHQ can trace anybody in the world then for people or organisations to say –we cant trace them was wrong . Some posters disagreed . Well todays news is that a boiler replacement company that bombarded the public with more than TWO Million unwanted marketing calls has been fined £180,000 . Glasgow based FEP Heatcare became one of the UK,s most complained about nuisance callers and the ICO TRACED the calls to FEP even though there was not a number left for the people who were harassed to reply to or see on Caller Display . ie- automated recorded sales message .

Profile photo of Ian
Member

Withholding a number only works for the public. Your number is shown to the Police, all 999 services and other official bodies.

Profile photo of duncan lucas
Member

Then why did it take so long for action to take place ? ,in any case before I left telecom I knew full well they knew what people,s numbers were who phoned in via the exchange it showed up on their VDU,s and their tracing methods but they didnt want the public to know and still wont admit what they can see and do . MY point is that many disagreed with me and if you look back at the old posts you will see that. It wasnt just a case of a public programmable app on BT,s exchange equipment to try to hide a number another method was used in FEP,s case they already knew that if they tried that simple method they would be rumbled right away. There are other methods Ian. You wouldnt want me to post them on a public website ???

Profile photo of John Ward
Member

Not if it’s classified information Duncan.

People certainly did question your reports that the authorities were equipped to trace the origin and destination of every call but I think in most cases their doubt was that the security services would actually bother to do so in the case of ordinary members of the public – the reasoning being that so few crimes were being solved this way that it was clearly a cumbersome and indirect process. And as you say, it has taken the ICO a long time to get anywhere with this case despite the immense volume of calls which must have sent wires ringing somewhere. Nevertheless, your warnings have been validated and I hope the rest of the perpetrators of these nuisance calls take due heed and stop it forthwith.

Member
Chris Mimmack says:
24 March 2016

The directors of marketing and telesales companies, along with the senior management know exactly what they are doing and should be held accountable. At the very least directors should get the standard ten year directorship ban, although fines would be much better, especially if they are pro rata to the amount they earn. £180,000 fine slapped on the boiler company is probably nothing compared to it’s annual turnover, but that amount slapped on each of the directors would be much better. While they can get away with it, they will. We need more accountability.

Member
Chris Shoko says:
31 March 2016

[Sorry Chris, your comment has been removed for breaching our Community Guidelines. Thanks, mods]