Principles will close telco loopholes: ACCAN

The Australian Communications Consumer Action Network (ACCAN) has today released a report that says the current system of regulation should be overturned in favour of governing by principles.

According to the report, rules-based regulation allows companies to find loopholes that "comply with the letter, but not the intention of the law".

It also means more red tape for providers because they have to follow prescriptive rules.

Regulating via principles, on the other hand, focuses on outcomes rather than rules, which allows companies more leeway, it said.

"Principles-based regulation allows for business flexibility, as this regulatory approach does not impose a labyrinth of prescriptive rules on a business. Rather, principles-based regulation tells businesses to apply the principles and achieve the resulting outcomes in whatever way is most efficient for them."

The principles the report suggested were that:

• Businesses must treat their customers fairly.
• Businesses must respect the privacy of their customers.
• Businesses must provide their customers with clear, accurate and relevant information on products and services before, during and, where appropriate, after the point of sale.
• Businesses must resolve customer disputes quickly and fairly.
• Businesses must ensure that advertising and promotion of products and services are clear, accurate and not misleading.
• Businesses must have appropriate policies and practices in place to assist customers who are disadvantaged or vulnerable.
• A business that breaches the principles-based regulation will provide an effective remedy for the customer and may be liable to an effective sanction.
• Businesses will develop ongoing monitoring and reporting measures designed to ensure successful implementation of the principles-based regulation.
• Customers will behave honestly in their dealings and cooperate with businesses when seeking to resolve any problems or disputes.
• For transparency and accountability, businesses will have their compliance with the principles-based regulation reviewed and reported by an external auditor.

The report also found that in order for regulation to function, the regulator needs to not be dragged in two directions. It said that in the case of the Australian Communications and Media Authority (ACMA), it should not be charged with encouraging market efficiency and protecting consumers, because one goal could overtake the other.

Therefore, the report suggested that the ACMA start a new division with a mandate to protect consumers. This division should have beefed up powers to take action against principles offenders such as issuing fines or revoking business licences.

The report also touched on the Telecommunications Industry Ombudsman, giving recommendations, for example, that it should follow up on cases where it has referred customers to the telco to sort out their issues.