Telcos slammed over hardship responses

Financial hardship practices of telecommunications companies are significantly worse than those offered by the banking industry and arrangements for customers struggling to meet their phone and internet bills are often unaffordable, a new report has found.

The big three telcos – Telstra, Optus and TPG (which merged with Vodafone last year) – were ranked by 228 financial counsellors on their financial hardship provisions, with Telstra scoring just 6.2 out of 10, Optus 5.6 and TPG 4.4.

Financial counsellors have marked down the financial hardship responses of telecommunications providers.Credit:

The survey of financial counsellors forms the basis of the report by Financial Counselling Australia, with most counsellors rating the telcos’ hardship responses as having “stayed the same” during 2020, despite the coronavirus crisis where almost one million workers either lost their jobs or had their hours significantly reduced.

The report acknowledges that Telstra, Optus and TPG, as well as some of the smaller providers, have been offering some extra support for customers during the pandemic, as well as in response to natural disasters. These include additional mobile data, extensions of unlimited calls and bill waivers for some health workers, among other measures. However, they were not doing enough.

Gerard Brody, chief executive of the Consumer Action Law Centre, says: “What is clear from this report and our own analysis is that financial counsellors and community lawyers are the ones left to clean up the mess when the telco industry fails.”

Counsellors help those in financial difficulty. Their services are free, confidential and independent.

Financial counsellors and community lawyers are the ones left to clean up the mess when the telco industry fails.”

Gerard Brody, chief executive of the Consumer Action Law Centre

Telecommunications is considered an essential service. Without access to a phone or the internet, people can miss out on employment opportunities, find it hard to make appointments with doctors or make contact with government services, the report says.

The counsellors say there also remains a prevalence of “mis-selling” of telco products, particularly to more vulnerable customers.

One counsellor had an intellectually handicapped client who was offered a new and additional product every time he phoned his telco to say that he could not afford to pay his monthly account.

“He ended up with five mobile phone numbers and a multitude of products and services that he didn’t use,” the counsellor said. He was faced with a bill of almost $600 a month, despite being on a disability support pension.

In the middle of last year, telco regulator the Australian Communications and Media Authority (ACMA) released a report that involved a “shadow shop” by consumers looking for ongoing phone plans. It showed a number of deficiencies, particularly for in-store sales.

Almost all customers had an external credit check – whether a purchase was made in-store, over the phone or online. However, when it came to purchases in-store, some were not asked about their ability to pay their phone bill.

Although those buying online or over the phone were asked about their capacity to pay, some were asked only if they were working and, if so, whether they were part-time or permanently employed when they could be on a low income or working as a volunteer.

The big three telcos contacted by this masthead say they take consumer protection very seriously.

TPG Telecom points to the strengthening in 2019 of ACMA’s Telecommunications Consumer Protection Code with which telcos must comply.

“The revisions include a range of increased consumer protections, including in selling practices, credit assessment, financial hardship and assistance for vulnerable consumers,” a TPG spokesperson says.

A spokesperson for Optus says it has a team of experts in place who support its customers experiencing hardship, whether affected by natural disasters, the pandemic or domestic violence.

A Telstra spokesperson says while it is rated the highest by financial counsellors for its hardship practices, the telco is always looking at ways to improve the experience for customers finding themselves in difficult times.

The spokesperson says there has been a decrease in the number of customers seeking financial hardship assistance, which the telco attributes to its efforts to help ensure that customers have a plan that matches their needs and their ability to pay.