Tuesday, 30 June 2020 12:15

Telco credit assessments under scrutiny by ACMA Featured


Australia’s telecommunications regulator, the Australian Communications and Media Authority (ACMA) says a study it commissioned shows telco in-store sales staff may not be adequately checking that customers have the capacity to pay for the services they are purchasing.

ACMA says telcos will need to “take on board lessons” from a new shadow shopping study it commissioned to look at how Australia’s three biggest telcos have responded to strengthened industry rules that came into effect in 2019.

The rules, set out in the Telecommunications Consumer Protections (TCP) Code, are designed to protect customers from financially over committing themselves by requiring telcos to perform credit assessments and to assess a new customer’s ability to pay.

ACMA Chair Nerida O’Loughlin said the study indicated that telcos had taken the new rules on board, but there were potential issues with in-store sign-up practices when compared to online or telephone sales channels.

“This is a small but helpful study that shows telcos may need to do more to educate their in-store staff about their responsibilities to ensure people have the capacity to pay for the products for which they are signing up,” said O’Loughlin.

“These safeguards are even more important in protecting people who are financially vulnerable during the COVID-19 pandemic.”

The ACMA study recorded the experience of 37 customers who had recently purchased post-paid telco products worth at least $1,000, and found that:

  • 16% were not asked about their capacity to pay for the product
  • a further 16% were asked only whether they work full or part-time, which is not sufficient information for a credit check under the code
  • all instances of insufficient credit-check questions being asked occurred during in-store purchases
  • almost half of in-store customers reported either no questions about their capacity to pay, or just one question on their employment status
  • an external credit check was obtained by the relevant telco for all but one of the customer purchases in the study.

“We will work with telcos over the coming months to build full compliance across all sales channels within the next 12 months before taking any more formal action for non-compliance,” O’Loughlin concluded.

The Telecommunications Industry Ombudsman Judi Jones says the credit assessments "mystery shopping study" by the ACMA shows telcos are making good progress in implementing strengthened consumer protection measures. 

Jones welcomed the overall “positive result” of the ACMA study but cautioned more work needed to be done to protect vulnerable consumers when signing them up in-store to products and services.  

“Phone and internet are an essential service for most Australians, particularly in this time of uncertainty. We all rely on phone and internet to do our work and remain connected to family and friends,” Jones said.

“Phone and internet services are especially important for vulnerable people who additionally need their telco for the social services that assist their day-to-day living. Credit checking and assessing a consumer’s ability to pay for products and services can contribute to stopping the cycle of debt that arises from not being able to pay for what they’ve signed up to.

“The result of this study demonstrates Telstra, Optus and Vodafone have taken positive steps to ensure appropriate credit checking is completed during online and telephone sales. I encourage all telcos to ensure that before agreeing to sell a post-paid plan, they make reasonable enquiries about a customer’s financial situation and assess the customer’s ability to meet minimum charges over the plan’s contractual term.” 

Australian Communications Consumer Action Network (ACCAN) CEO, Teresa Corbin says the results of the study “are certainly concerning, and confirm the feedback we get from consumers and financial counsellors that there is room for improvement”.

“The TCP Code exists to protect consumers from potentially harmful conduct. If the Code is not being followed by telco staff, there is a serious risk that consumers could be signed up for plans that they can’t repay and could leave them financially stressed,” Corbin said.

Corbin said the ACMA’s report echoes ACCAN’s own Spotlight on Telco Commissions and Targets which revealed that some customer service representatives may be inadequately trained in the consumer protections available for telco customers.

“ACCAN thanks the ACMA for their proactive approach to monitoring consumer safeguards and will be engaging closely with the regulator as they work to ensure that telcos are fully compliant with the TCP Code across all sales channels over the next 12 months,” Corbin said.



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Peter Dinham

Peter Dinham - retired and is a "volunteer" writer for iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).




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