ACMA proposes statement of expectations for how telcos interact with vulnerable customers

A majority of telcos included in an ACMA audit provided little information about oversight arrangements to ensure sales reps are interacting with vulnerable consumers appropriately.
Written by Chris Duckett, Contributor
Image: Getty Images

The Australian Communications and Media Authority (ACMA) on Wednesday put out for consultation a statement of expectations on how telcos should interact with vulnerable customers.

One issue to be handled off the bat is how do telcos identify vulnerable customers, as the Telecommunications Consumer Protections (TCP) Code does not contain a definition for vulnerable, and that's how ACMA likes it.

"This is appropriate given the varied circumstances in which a person may find themselves subject to disadvantage or vulnerability when participating in telco markets," the regulator said.

"The terms should be understood and applied broadly and without confining definitions or preconceptions."

This situation invariably leads to telcos applying different standards, but in an audit conducted over 12 months from October 2019, ACMA said it found most telcos took a "broad and inclusive approach".

"It is evident that most telcos recognise a wide range of different vulnerabilities that their customer base may face," the audit said.

A pair of telcos were found to have conditions that were too narrow, such as only focusing on financial capacity.

The telcos examined in the audit included Telstra, Optus, TPG, iiNet, Southern Phone, Tangerine, EscapeNet and Veetel.

On the subject of sales training, all telcos said they had monitoring of sales staff, but ACMA found problems with oversight and the regularity of training.

"The majority of telcos provided little information about specific governance arrangements to ensure their sales representatives are interacting with vulnerable consumers appropriately -- it appears that senior management may only become involved once significant non-compliance is identified," the audit said.

"Most of the training delivered by telcos dealt with consumers who may be experiencing financial hardship, an indicator of vulnerability. The training typically covered the options the telco had available to assist customers in financial hardship (such as spend controls and payment plans)."

One of the issues raised by the consultation paper was the April poor rating from financial counsellors grading the hardship support offered by telcos.

Research conducted by ACMA found over the 2019-20 fiscal year, 19,671 residential customers entered into hardship arrangements, and with most occurring between March to June 2020, were likely related to the COVID pandemic.

"Less than half (46.7%) of residential customers exiting a financial arrangement did so successfully," the consultation paper said.

"At 30 June 2020, total telecommunications financial hardship debt for the 9 providers was AU$5.74 million for residential customers (with 81% being debt related to a mobile service). Over the 2019–20 period, 4,080 residential financial hardship customers were disconnected, and 5,515 customers were subject to debt collection activities."

ACMA said it expects telco staff to help consumers "understand and express their needs and select the product or service most suited to those needs", and for telcos to not reward staff for upselling vulnerable customers.

"Anyone can experience vulnerable circumstances at some stage of their life, as we saw at the start of last year during the bushfires and more recently during COVID lockdowns. It's important telcos take extra care when dealing with these customers," ACMA chair Nerida O'Loughlin said.

"Telecommunications is now an essential service for everyday life. When consumers find themselves in difficult circumstances, we want to see telcos providing genuine and constructive support that, to the greatest extent possible, avoids disconnection of services."

Those wishing to comment on the statement of expectations have until 5pm AEST on 8 September 2021.

In May, Telstra was fined AU$50 million, the second-highest penalty ever imposed under Australian Consumer Law, for unconscionably selling mobile phone plans to Indigenous Australians for two and half years, which resulted in them receiving thousands of dollars of debt.

"This conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers," ACCC chair Rod Sims said at the time.

"Telstra's board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them."

In response, Reconciliation Australia removed Telstra's elevate status.

"As a company that formerly had [elevate status] we should have been a poster child for effective action around Indigenous issues," Telstra CEO Andy Penn wrote in a blog post

"However, what we failed to understand was that genuine effectiveness is much more than a series of programs, it must include a deeper level of connection and understanding including for the profound sense of dispossession and injustice that still so-often defines Indigenous Australia."

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