'Collections & Hardship Programs in Utilities, Banks & Telecommunications: Exploring best practice in hardship programs and collections across four sectors'

Thank you for the invitation to speak today.

As some of you may know ACCAN stands for the Australian Communications Consumer Action Network. We are the peak body for consumer representation and advocacy in communications.


We represent residential consumers and small businesses including not-for profit organisations in so far as they are consumers. ACCAN focuses on goods and services encompassed by the converging areas of telecommunications, the internet and broadcasting, including both current and emerging technologies.

We aim to empower consumers to make good choices about products and services and we administer a grants scheme which funds research into consumer issues in telecommunications.

I worked with ACCAN's predecessor organisation CTN for many years, so I feel well-placed to trace how things in the telco hardship sphere have progressed over time.


It is difficult to provide clear-cut figures on complaints related to customers in financial hardship because that is not a category that is used by the TIO.

The category of credit management is usually among the top areas for new complaints. Most recently it comes in at 21.5% of new complaints for the first quarter of 2014 which is a fairly typical figure.

To give you some idea of the scale of the issue, from 2012 we have figures from ACMA research showing that 14 per cent of customers had experienced difficulty in paying their telecommunications bill in the previous year.

It is fair to say that telcos have been slower than other sectors to recognise that there are responsibilities attached to the provision of essential services. Telcos are in fact not defined like other utilities as an essential service despite our dependence on these services.

Hardship policies have improved a good deal in the telco space but we are certainly not at best practice and the telcos have not demonstrated the same interest as for example the energy companies in prioritising good hardship policies.

So a brief overview of the last ten years.

Ten years ago complaints against telcos that related to circumstances of financial hardship were rising.

The situation we had then was that when companies were willing to enter into payment arrangements, it was usually on terms set by the telco that were often unrealistic.

Many consumers were unable to adhere to the payment arrangements because those arrangements were not realistic, despite the customer having shown a willingness to pay the amount they owed.

This often resulted in the termination of the customer's service, and in some instances, a credit default listing which we are all aware is a very serious and detrimental outcome for the consumer. It is also a costly outcome for the provider.

And quite often this occurred even when the amounts were small and without any notice to the customer.

The small consumer organisation of which I was a part – CTN – argued for a new priority to be adopted by the industry – maintaining customers' connection. We said that this shift should be seen as benefiting both the supplier and the consumer.

We said that developing fair and reasonable hardship policies, would result in a better balance between the industry's need to pursue payment and the right of the customer to remain connected to an essential service.

In 2004-5 telcos reported 63 per cent more customers to credit agencies than in the previous 12 months. A huge leap.

The regulator at the time, the Australian Communications Authority, became concerned about this steep upturn. The concern reached the Ministerial level and the Communications Minister directed the ACA to investigate and report on the credit management measures that were in place and what needed to change.

The ACA then held forums and commissioned research. They told the industry that recognising hardship customers was something they needed to focus on – something they needed to train their staff about. And of course they recommended that telcos should all have something specific and targeted to offer when a customer became a hardship customer.

The ACA looked carefully at other industries and the models they employed -- one example that comes to mind is Yarra Valley Water.


The result of all this was industry and consumers working together on a revised industry Credit Management Code. It contained a range of new provisions.

There was:
•a requirement to credit assess customers where usage or expenditure limits are not in place;

•a requirement to have credit control tools in place and available for use by customers to manage their expenditure;

•a requirement to give current information on the unbilled amounts on an account;

•a requirement to have a financial hardship policy to assist customers experiencing hardship that would be available on request; and

•a requirement to follow credit management processes before default listing a customer.

The requirement to have financial hardship policies was accepted by industry without a major fight because the specifics were largely left to each provider to determine.

This came into effect in 2006 and was an improvement – but there remained shortcomings especially in regard to awareness of the policies – and insufficiently visible advertising of them.

There was a big jump in hardship cases again around 2007-8 because a large number of older debts were sold off by telcos to third party debt collection agencies.

Fast forward a few years to 2012, and we see further improvements in the Code the requirements partly because the situation had not improved enough.

Under the hard-fought provisions of the new Telecommunications Consumer Protections Code, telcos must have a financial hardship policy that is easy for consumers to find and access.

Also, for the first time, the TCP Code requires telcos to include information about their financial hardship policies on reminder bills sent to consumers and to have clear ways for consumers to seek relief under those policies.

In the wake of the 2012 Code, the ACMA has been pursuing some modest enforcement action – with a small telco Live Connected being issued a formal warning over breaches of credit management provisions – including one provision which prohibits a telco from taking credit management action over an amount that is subject to an unresolved dispute.

In these cases, the ACMA found that credit management was initiated before customer complaints about their bills had been resolved.


It unfortunately does appear that hardship policies in the telco space continue to be less developed than other industries – dealing with symptoms rather than causes and using fairly standard debt collection practices rather than approaches tailored to the special circumstances of an essential service.

The major players, Telstra and Optus, are more sophisticated than the smaller providers, but they still need to take a more preventative approach.

They have been slowly moving in this direction, with for example, Optus abolishing overage charges. This type of move addresses some basic flaws with product design.

Better prevention has also come about as a result of new provisions in the Consumer Protections Code which mandates usage alerts when people are nearing their monthly call or data allowances and critical information summaries when people sign up for a service.


As far as recent work we've been doing: ACCAN along with FCA and other groups has worked with the Telecommunications Industry Ombudsman and industry body Communications Alliance to develop a Guide released in March this year to help consumers in financial hardship.

The Guide sets out the principles and practices that telecommunications and internet service providers may use when dealing with consumers in financial hardship.

The document builds on provisions in the Consumer Protections Code. It recommends providers take a broad perspective on hardship, acknowledging that the causes, length and severity of hardship can vary.

The origins of this Guide lie in the rise in complaints to the TIO about payment arrangements and service disconnections around 3 years ago.

The Principles are probably not particularly surprising to those of you here:
Accountability and Responsibility, Accessibility, Fairness, Flexibility, Mutuality, Proportionality.

The Guide emphasises the importance of well trained staff that take responsibility and the need for telco business leaders to oversee how their organisation responds to customers in financial hardship.

The document draws on the experience of banks, energy and water companies in dealing with consumers in hardship, and the personal stories from consumers who have themselves experienced financial hardship.

Importantly among the practices specified in the document is that there should be an offer of a range of payment options and incentives in line with the customer's capacity to pay.

These options may include providing an extension of time to make a payment or offering incentives, such as reduced payments, for meeting payment obligations.

Also, restructuring the customer's account to increase affordability and "right-sizing" or transferring the customer to pre-paid services.

An industry and consumer forum will be convened in 2015 to review the impact of the guide.


I would also like to take a few moments to tell you about a brand new comparative study undertaken by FCA under grant from ACCAN's research grant scheme. The study is called Hardship Policies in Practice. And the results are sobering.

The research included three focus groups with consumers who had difficulty in paying telco bills. The overall theme from the focus groups could be summarised in just one line: 'please help us'.

Participants on the whole found the experience of dealing with a telco about their debt exhausting and stressful. Many participants found it difficult to negotiate affordable repayment arrangements and said that collections staff did not listen.

Participants also raised issues relating to overseas call centres. There was a lot of animosity to overseas call centre staff. Most of the focus group participants strongly expressed a view that their overseas call centre experience was not a positive one for a variety of reasons, including communication difficulties.

One focus group was comprised of new arrivals to Australia. Comparatively this group found the process of financial difficulty much harder to navigate.

The research shows that that there are different approaches to hardship between the banking, utility and telco sectors.

Water companies and the banking sector were generally viewed more positively.

None of the financial counsellors interviewed considered any of the telecommunication companies to be demonstrating good practice.

Rather, they were viewed by the majority of financial counsellors as the least effective sector for offering hardship assistance.

The majority of telco focus group consumers did not realise there was an ombudsman scheme. Those that did generally had been working with a financial counsellor or caseworker and had used the service. Some people reported that they had to use the threat of escalating a dispute to the ombudsman in order to get a result.

It should be noted that overall awareness of the TIO is quite high with aided awareness at 57% according to the TIO's research and unprompted awareness at around 42% according to ACCAN's research.

In addition, one focus group participant reported that they asked the telco how to contact the ombudsman. In response, a telco employee told the person to look it up herself.

Some of these findings will not be surprising to those who follow the sector, although after all the Code revising that has gone on, it is disappointing.

These are the same sorts of experiences that were in the final report of the ACMA public inquiry into customer service and complaints handling,'Reconnecting the Customer' in 2011. We had hoped that things would change more than they have.


At present we think that there is just not enough emphasis or priority being placed on financial hardship by telcos. The visibility of policies is not high so we have ongoing difficulties with late fees and their application.

We also have insufficient emphasis on prevention of high bills from data downloading. Excess data charges are the latest reason for a spate of customer complaints – and the changes that have come in as part of the 2012 Code haven't really addressed this issue.

Regarding late fees, which continue to exist: ACCAN is opposed to them. We think that they can act as a disincentive to pay on time if people are under financial pressure. But we've worked to try and ensure that their application is fair and with provision for hardship cases.

Pensioner discount recipients will automatically receive a waiver from late fees. But in other circumstances a customer has to contact the telco to ask about waiver of late fees and we don't think that is best practice.

To wrap up, I would say we need regular dialogue between providers, regulators and consumers to effect systemic improvements with a close watch on whether those improvements are implemented properly and have an effect on complaints numbers.

Thank you all for your attention and feel free to contact me about any of this.