The Australian Communications and Media Authority (ACMA) has agreed to a revised Telecommunications Consumer Protections (TCP) Code that is set to take effect from 1 August.
Under the code, new customers signing up to a plan with a commitment of over AU$1,000, around AU$45 a month for 24-month contracts, will need to have a credit check from an external party, and customers will need to prove to the telco they are able to pay the bill.
"We see evidence of customers being encouraged to sign up to multiple plans which do not meet their needs, are excessive or beyond their financial capacity," said ACMA Chair Nerida O'Loughlin.
"The impact of this is serious, particularly for those in vulnerable circumstances, leading to financial hardship and denial of access to critical services."
ACMA said repeat non-compliance will lead to 'significant consequences' with penalties up to AU$10 million for not following directions from the ACMA.
"The new TCP Code puts the onus on telcos to ensure customers understand what they are buying. We will be subjecting telcos to close scrutiny as to how well their practices conform with the new Code," O'Loughlin added.
Industry group, the Communications Alliance, said the new code would also expand the quarterly Complaints in Context report, and was developed over the last two years.
"This revision comes at an important time for industry and consumers," said Communications Alliance CEO John Stanton.
"The Code is a cornerstone of the telecommunications co-regulatory system -- developed and managed by industry and relevant stakeholders, monitored by the industry-created body, Communications Compliance and enforced by the regulator, with resort to stiff penalties in the case of non-compliance."
In the latest Complaints in Context report, Telstra and Optus saw a rise in complaints, with Optus jumping from 6.9 to 9 complaints per 10,000 services in operation, while Telstra went from a complaints ratio of 6.6 to 8.2.