With Greater Manchester broadband giant TalkTalk collapsing into administration, and potentially being rescued by BT this morning, subject to regulatory investigation, insolvency expert Molly Monks (pictured, left) of Manchester’s Parker Walsh explains what the collapse means for the 2.5 million customers affected – including whether their broadband will be cut off, what happens to money paid in advance, existing contracts and bills, and whether customers could become creditors if they are owed money.
Walsh also explains what customers should do now and whether they should consider switching provider or simply wait for further communication:
“When we hear the words ‘administration’ or ‘insolvency’, it can sound as though everything stops overnight, but that isn’t necessarily what happens,” said Monk. “In TalkTalk’s case, the business has been transferred to BT, meaning the immediate priority is keeping customers connected while the transition takes place.”
Will your broadband be cut off?
For TalkTalk customers, the answer currently appears to be no.
Ofcom has confirmed that customers should be able to continue using their landline, broadband and pay-TV services as normal during the transition, while BT says there will be no immediate change to prices, contracts or billing.
Monks said: “The most important thing for customers is not to make a knee-jerk decision and immediately cancel their service because they have seen headlines about the company going bust.
“If another provider takes over a failed telecoms company, customers will generally continue receiving their service and their existing contract should transfer across.”
What happens to your money?
Customers who have paid for services in advance or have credit sitting on an account may understandably be concerned about whether that money is lost when a company becomes insolvent.
Monks said: “This is where the distinction between being a customer and being a creditor becomes important.
“If a company owes you money when it becomes insolvent, you may technically have a claim against the business. However, customers should not assume they will automatically lose money simply because a company has entered administration, particularly where the customer service itself is being transferred to another provider.”
She urged anyone with concerns about payments or account balances to keep copies of bills, payment confirmations and correspondence until the transition is complete.
Should TalkTalk customers switch now?
Not necessarily.
Ofcom says customers whose provider goes out of business and is taken over can usually continue using their existing service.
If the new provider changes the terms of the contract, customers should have the right to leave without paying an early termination charge.
Monks added: “If you are happy with your service, there is no obvious reason to panic and switch simply because TalkTalk has entered administration.
“Wait for official communication and check exactly what, if anything, is changing before making a decision.”
However, customers who are already out of contract may want to use the situation as a prompt to compare deals, while anyone in vulnerable circumstances should make sure their new provider knows this.
The bigger warning for customers
The TalkTalk collapse also highlights why consumers should keep important financial records even when dealing with everyday services such as broadband.
Monks explained: “The lesson from any high-profile insolvency is that customers should keep their paperwork.
“Save recent bills, contracts, payment records and any important correspondence. If something does go wrong, having a clear record of what you paid and what you were promised can make resolving the situation much easier.”
Anyone concerned about their TalkTalk account should wait for official communication from the company or BT and check whether their contract, billing arrangements or service are changing before taking action.
