Tuesday, 02 July 2019 05:35

Revised telco Code does not protect consumers adequately: consumer groups Featured

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Teresa Corbin: "Should the Code not be a sufficient safeguard, it may be time to explore an alternative approach to regulation." Teresa Corbin: "Should the Code not be a sufficient safeguard, it may be time to explore an alternative approach to regulation." Supplied

A number of consumer groups have criticised the revised Telecommunications Consumer Protection Code, which was announced by the Australian Communications and Media Authority on Monday, saying it does not provide adequate protection for consumers.

Among the groups that expressed dissatisfaction with the revised Code were the Australian Communications Consumer Action Network, the Consumer Action Law Centre, WEstjustice, Financial Counselling Australia, the Financial and Consumer Rights Council, the Financial Rights Legal Centre, Money Mob Talkabout, and HK Training and Consultancy.

ACCAN chief executive Teresa Corbin said: "While we welcome the ACMA’s enforcement intentions, they can only enforce existing rules.

"If the rules developed by the industry in the Code are flawed, the regulator will be hampered in its effort to protect telco consumers. Should the Code not be a sufficient safeguard, it may be time to explore an alternative approach to regulation.

“We know that vulnerable consumers are more likely to be taken advantage of by high-pressure sales staff. However, the knowledge gap between the average customer and telco team members means that we’re often relying on their advice as to what we should buy and how much to spend.”

Some of the criticisms levelled at the revised Code are:

  • Selling practices
    • Customers could easily find themselves over-committed when it comes to buying telco products due to questionable sales tactics from telco sales staff.
    • The telco industry has continued to shift responsibility onto customers who are subject to high-pressure sales tactics leading to extraordinary customer debt and financial harm.
  • Customer credit assessments
    • Telcos only have to confirm new customers’ source of income and credit rating for a product or service costing more than $1000.
    • While welcoming the addition of an external credit check, consumer groups would like to see telcos adopt an affordability assessment like those required for other types of credit.
    • When looking at whether a consumer has the ability to pay for a good or service, telcos should go beyond asking customers about their source of income.
    • Telcos should have to inquire about any outstanding debts or ongoing spending so that they have a comprehensive idea of how much consumers can comfortably spend.

Fiona Guthrie, chief executive of Financial Counsellors Australia, said: “For many years now, financial counsellors have been seeing clients who have been mis-sold expensive handsets and other telco devices. This saddles people with unaffordable debt and leads to financial hardship. We had hoped that the new Code would tackle this problem head on and are really disappointed that it doesn't. As telcos increasingly move into selling a wider range of devices, the problem will get worse, not better.”

Carolyn Cartwright, the managing director of MoneyMob Talkabout, added: "In the last 18 months, we have documented over $700,000 worth of telco debt in remote Indigenous communities, and there is a commonly occurring pattern of sales involving multiple premium devices and add-ons such as speakers or headphones. Very often, these consumers have little understanding of the implications of the contracts they are signing.”

And Gerard Brody, chief executive of the Consumer Action Law Centre, said: “Expensive post-paid telco products are just like loans, which can mean people end up with high debts. That’s why they need to be regulated like other credit. Banks must assess loan affordability; telcos should do the same, but the industry Code doesn’t require genuine assessment.”

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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