The enhancement of protections comes after the ACMA announced on Monday that it had revised and strengthened the Telecommunications Consumer Protections Code which requires telcos to promote and sell their products in a fair and responsible manner.
The industry-developed Code also requires telcos to clearly explain key terms and conditions to enable consumers to make informed decisions and to assess a customer’s capacity to pay.
"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.
O’Loughlin said compliance with rules governing sales practices, financial hardship and credit assessment is a priority for the ACMA in reducing consumer harm, and the ACMA will be monitoring and investigating non-compliance and testing the effectiveness of the new rules.
O’Loughlin also warned that repeat non-compliance with the TCP Code could lead to significant consequences for those breaking the rules, and telcos face penalties of up to $10 million for failing to comply with 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 warned.
Under the changes, for new customers on total contracts of more than $1000 (typically $45 per month), telcos will require customers to provide information about how they will pay their bill – and an external credit check from a credit reporting body will be required, with these provisions also applying to pre-paid customers moving to post-paid accounts.
The chief executive of industry lobby group, the Communications Alliance, John Stanton, says the revised Code will provide greater transparency about the comparative customer service performance of the major service providers in the Australian market – through an expanded Complaints in Context index, published quarterly.
Stanton said the CAODE had also been expanded to provide protections to more small businesses in Australia.
“This revision comes at an important time for Industry and consumers,” John Stanton said.
“As telecommunications become more central to everyday life and consumer expectations evolve, we are also seeing rapid change within the Industry, with more providers joining the marketplace and evolution in product offerings and in the service delivery chain.
“It is vital to that ensure consumer protections keep up with the pace of change, in pursuit of ongoing and positive improvements in consumer experience.”
Stanton noted that compliance with the Code was mandatory for all telecommunications providers servicing residential and small business consumers, and was enforceable by the ACMA.
And Stanton said the latest revision to the Code was undertaken by a Committee of Consumer, Industry, Government, and Regulator representatives, led by an Independent chair, Fay Holthuyzen, with the process also benefiting from an extensive public consultation process, which added value to the new measures.
“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."