Review of 1995
Changing Markets And New Technologies
In The Public Eye
ICSTIS At Work
Premium Rate Dialling Codes and Tariffs
Set up in 1986, ICSTIS is responsible for setting and reviewing standards relating to the content and promotion of premium rate services through its Code of Practice. It investigates public complaints, monitors services, recommends measures to achieve compliance with the Code and publishes information relating to its work. The Committee is supported by a full-time Secretariat.
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A welcome indication of improving levels of compliance with the Code of Practice and a maturing industry was the decrease in the number of complaints, which was again recorded this year. The number of complaints, 3,252, remains small in relation to the use of premium rate services overall - almost five million calls are made each week.
However, as the figures show, some practices continue to generate complaints and bring the industry into disrepute and it is on these that the Committee has focused its attention.
A combination of events at the end of 1994 prompted us to appoint Coopers & Lybrand to conduct a wide-ranging review of ICSTIS during 1995. The review, which looked at the organisation itself and cast an eye to future developments, was completed in March. We are enormously grateful to those who, over the Summer, gave their time to discuss its recommendations.
Our response in December set out a clear and ambitious agenda for change over the coming year. However, it also highlighted some areas of the premium rate industry which needed further debate, notably the development of alternative payment methods, Internet access and new media - areas which, while on the periphery of our activity, are increasingly impinging on our work.
The review of the ICSTIS Code of Practice, with the seventh edition published in May, maintained our commitment to ensuring that its provisions are current and relevant to consumer needs, market developments and new technology.
Another Code review will be conducted within the next 12 months in response to the wide range of policy issues which have been addressed during the year, such as competition services, the transfer of responsibility for live services from Oftel to ICSTIS, new and higher tariffs and international services.
In 1995, we saw the departure of Jon Carter from the Committee. We record our thanks to Jon for his contribution to our work. His replacement, Gordon Simpson, joined us early in 1996. Over the next two to three years, ICSTIS will be seeing further changes on the Committee as members complete their terms of office. I am confident that the decision to advertise posts in future will ensure that ICSTIS continues to attract the breadth and quality of contribution which we have enjoyed to date.
I am acutely aware that for organisations like ICSTIS to maintain the confidence of those for whom we perform our functions, the Committee needs to focus its efforts on demonstrating its accountability on all fronts. In 1995, we began to implement changes leading to greater transparency in decision-making and appointments and we will continue to address this issue in the coming year.
I was also pleased to welcome representatives from the network operator and service provider sectors to the ICSTIS Industry Committee (IIC) which we formed in 1995. This forum allows us to exchange information and views with the industry sector. The IIC advises ICSTIS on policy and procedural matters and, although still in its early days, I am pleased with its progress and encouraged by the industry’s support for this initiative.
During the past year, ICSTIS has looked increasingly to its European and international counterparts to debate issues and learn from their experiences. The challenges of regulating adult services which have moved off-shore have focused attention on the need for cross-border co-operation. The network of European premium rate service regulators is stronger than it has ever been and a programme of regular meetings, which began in Dublin last year, looks set to continue as our agenda of common issues grows.
Under Sarah Harrison's directorship, we have seen a thorough review of the Secretariat functions over the course of last year, much of which has flowed from the Coopers & Lybrand Report. While work is continuing, my Committee colleagues and I have been very pleased with the progress of this review which has seen a number of procedural and organisational changes, all of which are designed to achieve a more responsive and modern approach to the needs of those who use our services.
Greater efficiencies achieved by the move to new premises at Alton House, staff reorganisation and contract reviews enabled us to deliver an 11 per cent saving in the 1995 budget. In the forthcoming year, we expect to see an increase in the number of operators licensed to carry premium rate services and in the types of service employing this method of payment. Similarly, we expect to see more changes in the way services are paid for and the use of new media.
The flexibility which has characterised the ICSTIS system of regulation will be a key factor in responding to these developments and in maintaining consumer protection and best practice within the industry.
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Dealing with public complaints about premium rate telephone services continued to dominate the Secretariat's work in 1995, although complaints trends are changing. Last year, 3,252 complaints were received - a 31 per cent decrease on 1994.
The profile of complaints continues to change with an increased polarisation between the straightforward and the complex. The complexity has been driven largely by the use of new services and technology, particularly greater use of premium rate as a payment mechanism for products and for access to new media, such as bulletin boards and the Internet.
The balance of the Secretariat's work has shifted during the course of 1995. Far more pre-emptive advice and guidance on Code compliance, new services and the use of new media is now being given. The Secretariat regularly handles between 100 and 150 enquiries connected with copy a dvice and the setting up of new services each week. This is a development which we welcome and have encouraged.
The introduction of an approvals procedure for services charged at the higher rate has meant greater resources being dedicated to ensuring that applications comply with the Code and Higher Tariff Guidelines, before services start operating. 271 applications have been approved, although only 67 of these appear to be operating.
There are a wide number of views held in the industry about the future and potential of new tariffs. ICSTIS’ concern, as always, is to be sure that the regulatory controls meet consumer protection needs but in so doing do not hinder the successful development of services - at any tariff.
Changing trends in the profile of work demand that the Secretariat staff are equipped and skilled to respond. The Coopers & Lybrand review, commissioned at the end of 1994 and one of my first projects as ICSTIS' Director, provided a starting point from which to move the organisation and management of the Secretariat forward.
The Coopers & Lybrand report contained 61 separate recommendations relating to the Secretariat. Each of these has been considered by staff and Committee members working together. A programme of change affecting all aspects of ICSTIS' working practices has been running since the Summer, under the management of Associate Director Mark Long, who joined us early in 1995.
The case handling procedure - from receipt to report - has been under close scrutiny and changes to improve speed and efficiency have been introduced. Staff reorganisation has also taken place alongside a review of our human resource policy, with many changes arising from this.
The objective throughout has been to build a flexible and responsive team, working to robust procedures in an increasingly target-driven environment. The decision to work for the international quality standard ISO 9002 is indicative of our commitment to this programme of review and improvement.
The policy development and external relations team has also been reorganised. This is now managed by Anthony Smith who joined us as a second Associate Director at the end of 1995.
The external relations programme continues to be a success - a key element of this being the programme of regional visits. Six visits, attended by over 150 representatives from Trading Standards Departments, consumer groups and publishers, were conducted during the year and continued to attract good local radio and television coverage.
Research and analysis has been conducted into the wider policy issues emerging from the Coopers & Lybrand report, such as the impact of alternative payment systems (credit card) and new media (Internet).
A programme of financial management and efficiency reviews has been carried out over the year. The staff reorganisation alone has contributed to significant savings in the 1995 budget.
The progress which has been achieved over the past year owes a great deal to the hard work and co-operation of the Secretariat staff and thanks are due to everyone.
Challenging and complex issues will continue to face ICSTIS over the coming year. The changes which have been made in 1995 will put the organisation in a strong position to maintain effective regulation of premium rate services as well as to meet and respond to the developments in the wider communications sector which inevitably have an impact on our work.
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(Jon Carter left the Committee at the end of 1995. Gordon Simpson joined the Committee at the beginning of 1996)
Claire Milne is an independent consultant specialising in consumer aspects of telecommunications and numbering, strategy and regulation. Her earlier career was mainly within BT in a variety of management positions, including network planning, regulation and marketing. She is also a member of Oftel's English Advisory Committee on Telecommunications (ENACT).
Kate Markus is a barrister at Doughty Street Chambers specialising in Public Law. Previously, she was a Senior Legal Adviser at Brent Community Law Centre and was Executive Committee Member, including Chair, of the Law Centres Federation for many years. She is a member of the Legal Aid Board, Chair of the Public Law Project, Honorary Fellow in Community Law Practice at the University of Kent and is actively involved in human rights work.
Frank Taylor has responsibilities for special educational needs at a large inner city secondary school in North London, where he helps children with a variety of needs, including learning difficulties, behaviour problems and physical disabilities. He is also a teacher governor at the school. Before entering the teaching profession, he worked in three successful advertising agencies, where he gained both business and advertising experience working on a number of well-known brands.
Baroness Dean (Chairman) is currently a non-executive director of University College London Hospitals and the NHS trust. She is a member of the Council of the Association of Business Sponsorship of the Arts and is a governor of the London School of Economics. She is a member of the Press Complaints Commission and a non-executive director of paper manufacturer Inveresk plc and of Chamberlain Phipps PLC. She is also Honorary President of the College of Occupational Therapists. Until 1992, she was Deputy General Secretary of the Graphical, Paper and Media Union.
Mark Stephens is the founding partner of London media law firm, Stephens Innocent. He was co-founder of a legal advice service for visual artists, ARTLAW, and was involved in the formation of the Design Artists Copyright Society. He is well known for his work on numerous high profile court cases and for his commitment to human rights. He is also a regular broadcaster on legal issues.
Jeremy Mitchell is an independent Consumer Policy Adviser to a number of international organisations, public bodies and consumer groups and a writer and broadcaster on consumer issues. Formerly, he was Director of Consumer Affairs at the Office of Fair Trading and Director of the National Consumer Council. He is a Board member of the Personal Investment Authority and a Council member of the Scottish Consumer Council.
Shirley Daniel has a background in teaching, mainly with ethnic minority children. She has been a member of the Ethnic Minorities Advisory Committee of the Judicial Studies Board, and continues to assist in the training of members of the judiciary on ethnic minorities and the courts. Shirley is also an inspector of schools with OFSTED, a Chief Examiner of GNVQ science for the British Training and Enterprise Council and a Non-Executive Director of Brent and Harrow Health Authority.
Yvonne Light has worked in journalism for 13 years, for both trade and consumer press. Previously Health and Beauty Editor of Good Housekeeping magazine, she is now a part-time writer, specialising in women's health and family issues, and also does some PR, research and editing work.
Valerie Howarth is Executive Director of ChildLine and serves on a number of committees and working parties concerned with child care, international social concerns and disability. A social worker by profession, she was previously Director of Brent Social Services and Assistant Director in Lambeth.
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Competition services again generated the highest number of complaints - a total of 881 were received, 27 per cent of the total number of complaints.
Misleading claims about services and lack of adequate pricing information continue to cause most public concern. The 711 complaints received about misleading promotional material and content - 22 per cent of the total number of complaints - highlighted the fact that consumers feel that they are still not always receiving adequate call information.
There continues to be a high percentage of complaints - 34 per cent - that occur when the complainant has been unable to complete a call because of technical problems on the line.
11 per cent of cases investigated were generated internally from monitoring.
Through feedback from the industry, it is becoming increasingly apparent how much this service is valued and welcomed. More and more it is being recognised that ironing out problems at the preparation stage can avoid the expense of having to abandon a service or promotion in mid-campaign. This has been reflected in the fact that the Secretariat now receives between 100 and 150 enquiries each week connected with copy advice and the setting up of new services.
|Not Requiring Investigation||Operational Difficulty||1109||1820|
|Not Within Remit||98||120|
|Total Complaints Completed||3186||4733|
Misleading claims continued to cause concern with the general public. The unlucky Mrs YYYY was one of 750,000 people who thought they had won £20,000 when this leaflet arrived through her letterbox.
After carefully weighing the evidence, ICSTIS found the mailshot misleading because it did not make clear that the certificate was an entry into a prize draw and not a claim for a prize. The service provider was fined a total of £10,988.
Of those cases investigated, 85 per cent were found to be in breach. Fines imposed during the year exceeded £50,000 and 20 services were barred from operating.
Of the 881 complaints received about competition services during the year, technical problems experienced by consumers were the most common cause for complaint in 1995 - two thirds of the complaints received were classed as "operational difficulties".
There was also public concern about the simplicity of competition questions and the potential illegality of some premium rate competition formats.
The Telemillion competition was an example of this concern. Promoted on television and in the national press, participants had to give answers using a premium rate number. Those who answered correctly would be entered into a draw, with the winner being chosen at random.
ICSTIS received a number of complaints questioning the legality of this service. Complaints were referred to the police and, in July, the case went before Southampton Magistrates Court and Telemillion was found to be both an illegal lottery and an unlawful competition.
At the beginning of the year, ICSTIS convened a working group to review these issues and, in May 1995, published the seventh edition of its Code. This included new and revised provisions aimed at tightening the rules relating to competition services, including addressing the question of how additional information, such as the details of major prize winners and supplementary rules, should be made available to consumers.
At the end of 1995, the Committee decided to re-establish its working group to clarify ICSTIS' position on the issue of legality, post-Telemillion, to monitor the level of compliance with the new Code to see how the new provisions were working and to look at consumer needs and expectations.
A consultation document with the results of the review will be published in early summer 1996.
Callers who revealed three identical figures on the National Leisure scratchcard were invited to call a premium rate number to find out what they had won and how to claim their prizes.
Unreasonable delay on the line was a common complaint from members of the public, as were misleading claims.
The scratchcard claimed that prizes included a "holiday for two or night out in a top cabaret nightclub". Further investigation revealed that the holiday could only be taken at a list of approved hotels at specified times and that all meals would have to be paid for. As for the night at the cabaret, the prize was for one person only and would have to be taken on a night specified by the club's management.
ICSTIS found the promotion to be misleading and the service unreasonably delayed and imposed a fine of £6,000 on the service provider. In addition, access was barred to the service.
What is virtual chat? To put it simply, the caller leaves a recorded message which is relayed almost instantaneously to other callers on line, thereby giving the impression of a "virtual" conversation.
Even though virtual chat lines have now superseded chatlines, the concerns surrounding these services are similar: they appear to be attractive to teenagers, who may not be aware of the cost of the call, a fact which often leads to unauthorised usage resulting in high bills. The nature of the content of calls is also a cause for concern.
A review will be conducted to examine the current size of the virtual chat market, to see whether consumers are adequately protected and to evaluate current provisions and levels of compliance with the Code.
However, the changing nature of services and the effectiveness of ICSTIS' regulation led to discussions in 1995 between Oftel and ICSTIS about the transfer of responsibility for live services from the Director General of Telecommunications to ICSTIS.
This move has been welcomed by the industry and work is now being done to effect the transfer.
It was agreed with the industry that all applications to operate services at the higher rate should be approved. ICSTIS published a list of guidelines to help service providers understand the types of service that were likely to be approved.
To date, ICSTIS has received 306 applications to run higher rate tariff services at £1.50 per minute. Of these, 271 have been approved and 67 have notified ICSTIS that they have begun operating.
In the Autumn of 1995, having had the benefit of applying the guidelines for the best part of a year, ICSTIS decided to review them to ensure that regulatory controls were meeting consumer protection needs but, at the same time, were not hindering the development of services. The results of consultation on the future regulation of the higher tariff will be completed by Summer 1996.
Complementing the normal process of consultation used by ICSTIS, which involves the industry and the wider community of interested parties, the ICSTIS Industry Committee (IIC) was formed to advise ICSTIS on issues likely to affect the development of premium rate services. It will look at how services are regulated and, where appropriate, will make recommendations to ICSTIS regarding these.
Chaired by Baroness Dean, the Committee comprises two other members of ICSTIS and six industry members, three nominated by the network operators, and three by service providers.
IIC members are appointed in their individual capacities, bringing a wealth of experience in the premium rate telephone services sector to ICSTIS' work.
There are currently 15 dialling codes on which premium rate services operate and, with the arrival of new network operators, the number of codes is likely to increase over the coming months.
In response to the increasing public confusion, ICSTIS canvassed industry and consumer opinion on future approaches to numbering and recommendations for further work were made to Oftel.
One proposal is that premium rate services should be allocated a uniform range of dialling codes so that consumers can tell that the call being made is premium rate. For example, part of the dialling code 09 could be allocated especially for premium rate services.
A second proposal concerns the sequence of the numbers after the special code.
ICSTIS is interested in exploring further whether this could be used to give more information about either the cost or the type of service (competition, dating, information, etc) consumers are calling.
ICSTIS recommended further consumer research and a joint project with Oftel is now under way.
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ICSTIS' concerns about these services are with high telephone bills, unauthorised use and offensive service content and advertising.
The provisions in the ICSTIS Code of Practice offer the only controls over these types of service.
Throughout the year, ICSTIS has pursued several cases involving services of an adult nature which have been advertised in generally available publications (non-top shelf), such as the Daily Sport.
Our adjudications on services found to be in breach of the Code have been referred to the network operators, who, with the co-operation of their overseas counterparts, have been successful in removing a number of services.
However, there is a need to address the wider issues arising from the problems in this sector, through international action.
ICSTIS has been working hard to encourage those organisations in a position of influence, such as network operators, government and regulatory authorities worldwide, to raise the issue internationally in order to achieve more effective consumer protection in an area where it is clearly required.
The Chairman and Director went to Geneva in July 1995 to bring this issue to the attention of the International Telecommunications Union (ITU). This issue has been considered within an ITU Study Group.
It clearly contravened the top-shelf Code provision which prohibits the promotion of adult services in generally available publications.
ICSTIS invoked its emergency procedure and temporarily barred access to the service while a formal investigation was carried out.
The breach was subsequently proven and ICSTIS recommended that access to the service should be barred. The network operator, in this instance BT, acted on the recommendation and barred access for a total of three months.
It is likely that, with the entrance of new network operators to the market, new tariffs will be introduced.
ICSTIS recognises that an opening up of the tariff structure will both stimulate industry development and will provide consumers with greater choice, but its success will depend largely on the care taken over implementation.
Over the past 12 months, this series of events has, in part, been repeated in the On-line and Internet service industries. Headlines in 1995 expressed similar concerns. The premium rate and On-line industries are very different. However, the services share some common characteristics, which suggest that there may be some useful lessons to be learned from the regulation of premium rate services.
Over the past year, the use of premium rate dialling codes to access bulletin boards and the Internet increased significantly and ICSTIS has had to turn its attention to this new area.
In 1995, the Code was applied to 25 cases involving bulletin boards, following complaints from the public.
In one instance, a fine of £1,700 was imposed on a bulletin board service provider whose service, advertised in a generally available publication, was found to contain sexually explicit images.
ICSTIS recognises that consumers are protected to an extent by virtue of the fact that payment is made by credit card - card holders must be over 18 years of age and there is much less opportunity for unauthorised use. However, the credit card offers little protection to those who are offended by the advertisements for these services and their availability. These concerns were key in influencing ICSTIS’ decision to require premium rate adult services to be advertised in top shelf publications only.
In its report, Coopers & Lybrand recommended that credit card services should be subject to the same level of control as premium rate services.
ICSTIS has been considering this recommendation during the latter part of 1995, particularly the questions of how services should be defined and how regulation could be enforced.
There has been some concern expressed in the media and among MPs which ICSTIS has noted. However, the issue requires further consideration and debate before any action is taken.
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We were the subject of 118 articles in total, 25 of which appeared as feature articles in specialist telecommunications publications.
ICSTIS was featured 66 times on national and regional television and radio.
ICSTIS also conducted 32 industry seminars and presentations around the country.
ICSTIS had a stand at the 1995 Institute of Trading Standards Administration Conference in Scarborough
The Director, Sarah Harrison, spoke at an industry seminar in London
We now have a consumer leaflet stand in Birmingham Central Library
We ran a workshop with Advertising Managers in Belfast
We met with service providers in Southampton
Today, many of the solutions to consumer protection and regulatory issues in the communications sector require an international approach.
Two major events in 1995 saw ICSTIS making progress in establishing international links.
The Secretariat made a useful fact-finding visit to the United States in the Summer to look at developments in the US premium rate and On-line industries.
Meetings were held with 11 different organisations, among them the Federal Communications Commission, the Federal Trade Commission, the Interactive Services Association, the Internet Society and the Consumers' Federation of America.
Invaluable contacts were made during the visit and these have been maintained and made use of in the remainder of 1995.
In October, members of the Committee and the Secretariat attended Telematics '95, a three-day international conference on European and international developments in audiotex and videotex, and the consumer protection and regulatory issues relating to these.
The conference, sponsored by six of Europe’s major telecoms carriers, including BT, France Telecom and Deutsche Telekom, took place at Dublin Castle and was attended by 112 delegates from 21 countries.
All sectors of the telematics industry were represented, including the network operators, regulatory organisations, service providers and consumer groups.
ICSTIS was a key participant in the conference, with Baroness Dean chairing the session on regulation.
A closed meeting of European premium rate service regulators proved to be one of the highlights of the conference.
A wide range of issues was on the agenda, including the changing premium rate services environment, market developments across Europe and the control of international services.
The success of this initial meeting of European regulators was reflected in the fact that it was agreed that the meetings should continue on a regular basis and that the group should establish itself as a forum for premium rate service regulators across Europe.
In addition to the meeting of European regulators, ICSTIS also conducted, and has now published, a survey looking at the different approaches to regulation in European and some international premium rate service markets. The information for the survey, which is the first of its kind, was collected from 21 countries.
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The Compensation Fund continued to receive and pay out claims during 1995, although, as predicted, there was a significant reduction on 1994.
The introduction of BT's "opt-in" facility, which meant that subscribers could only access adult services with a PIN code, led to a decrease in the incidence of unauthorised use.
Furthermore, greater public awareness of call barring facilities and the reduction in the number of service providers offering live tarot services has contributed to the level of claims received dropping from 61 in January 1995 to 15 in December.
By the end of 1995, the One-To-One Fund had paid out a total of £1,002,267.93 since its introduction. During the year, 362 claims were received, of which 105 succeeded in gaining an award. The total amount paid out of the Fund in 1995 was £32,605.55.
ICSTIS recognised that the dramatic fall in the number of claimants warranted a detailed review of the nature of the existing scheme. During 1995, it developed a model for a new scheme that would be able to deal effectively with the reduced number of claims now being received and at a lower cost.
Having consulted on the proposed model, ICSTIS is now in a position to be able to introduce the new scheme and this will take place at the same time as the transfer of responsibilities for live services from Oftel to ICSTIS.
Thus, 1996 should see the end of the One-To-One and Chatline Funds and a notice of the termination of the schemes as they relate to the 0898 prefix has already been published in the national press.
However, ICSTIS remains committed to retaining proper financial redress arrangements for as long as they are required under the new scheme, which will continue to protect those subscribers who incur high bills through unauthorised calls to live services.
ICSTIS is also aware of the increased instance of unauthorised use of virtual chat services, resulting in high bills, and, with this in mind, a review will be conducted into these services during 1996.
Sir John Bailey KCB
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|Funds Provided (1)||1,332,288||1,693,863|
|Expenditure||Committee Secretariat Costs (2)||749,516||907,204|
|Adjudicator's Secretariat Costs (3)||57,439||188,234|
|Legal and Professional Fees||83,612||134,981|
|Accounting and Audit||11,260||16,250|
|Profit before Tax||7,489||3,312|
|Profit After Tax||0||0|
(1) The company is non-profit making. Funds are received from the network operators and the compensation fund in order to match the expenditure incurred. The figures have been adjusted to allow for timing differences in the receipt of such funds.
(2) The Committee Secretariat costs shown above indicate the costs attributable to supporting the Committee in its work of supervising premium rate services, and include staff, accommodation, office equipment and policy advice.
(3) The Adjudicator's Secretariat costs shown above include the costs attributable to the administration of the Chatline Claims and the Live Conversation Compensation Funds and include staff, accommodation, office equipment and adjudicator's fees.
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The panel adjudicates and imposes sanctions, which range from undertakings concerning future behaviour to fines and service barring.
The External Relations Sub-Committee is responsible for promoting awareness and increasing the understanding of ICSTIS' work amongst the premium rate sector, parliamentarians, consumer organisations and the general public.
The Consumer Research Sub-Committee is responsible for considering issues that would benefit from consumer research and commissioning this research where appropriate.
There is also a Finance and General Purpose Sub-Committee, responsible for overseeing expenditure and presenting ICSTIS' budget.
In addition, the Secretariat offers advice and guidance to service providers, and others, on the interpretation of the Code and how to achieve compliance with it.
On a day-to-day basis, the Secretariat also handles general public and media enquiries about all aspects of premium rate services and advises the Committee on the development of ICSTIS policy and its Code of Practice.
Director: Sarah Harrison
Associate Directors: Mark Long, Anthony Smith, (Tom Mockridge and Jacqui Simpson left the Secretariat in 1995. We acknowledge their significant contribution to the Secretariat's work.)
Case Team Managers: Elizabeth Cloud, Catherine Gerosa
External Relations Manager: Kate Close
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