Financial hardship complaints to Australia's telecommunications ombudsman have surged 71.9% year-on-year, as four major telcos receive formal government warnings for breaching rules designed to protect struggling customers.
Investigations by the Australian Communications and Media Authority (ACMA) found breaches of the Financial Hardship Standard by Optus Mobile, Origin Energy, Skymesh and Swoop Telecommunications.
The enforcement action comes as 2.4 million Australian adults experienced financial difficulty or had concerns relating to their telco bill in the past 12 months, yet only 4,388 residential customers had financial hardship arrangements in place.
Compliance failures across the board
Under rules that came into effect in March last year, telcos must include certain information in written communications with customers.
Bills, reminder notifications about overdue bills, and communications to identify if a customer is in financial hardship must include information about options for assistance and how to contact their telco for help.
Each of the telcos was found to have failed to provide all the required information in at least one of these types of written communications with its customers.
“Struggling to pay household bills can be an extremely stressful situation and these rules were put in place to help people going through these circumstances,” ACMA's Samantha Yorke said:
"[Yet] all four of these telcos failed to comply with the rules and as a result have let their customers down."
Both Swoop and Skymesh were found to have failed to ensure their staff training was appropriately delivered.
Under the rules, telcos are required to deliver mandatory financial hardship training to relevant staff before they start dealing directly with customers, and then continue to deliver this staff training annually.
Optus was also found to have failed to include the required information in written notices to customers confirming arrangements for financial hardship assistance.
Market dynamics amid rising pressure
Recurring themes within financial hardship complaints include telcos refusing payment plans or extensions, offering unsuitable or unaffordable payment arrangements and service disconnection or suspension.
The enforcement comes as Australia's telecommunications market faces significant pressure.
The top three mobile operators Telstra, Optus, and TPG Telecom accounted for 56.5%, 23.9%, and 13.1% of subscriptions respectively in 2023, with the overall $22.13 billion telecomms market growing at a steady CAGR of 1.6%.
Yet, small providers are gaining ground.
Over the March quarter, the market share of Telstra, TPG and Optus dropped by 0.9%, representing 58,000 services collectively, with smaller providers, led by Aussie Broadband, Superloop and Southern Phone accounting for 15.4% of the market.
Enforcement intensifies
As they were being investigated, the telcos were already moving to update their written templates and train their personnel in accordance with the rules.
ACMA says the telcos can do more, and it will soon publish guidance to assist industry in supporting their customers and to set out its expectations for compliance.
Telco compliance with the FHS remains an area of focus for the regulatory body next year, too.
If any breach of the rules again it could lead to more significant enforcement action - including penalties of up to $250,000 per contravention.
What has changed?
The new Financial Hardship Standard requires telcos to establish and promote clearly accessible written financial hardship policies, do more to proactively identify customers experiencing financial hardship and prioritise keeping them connected to services.
New protections include broadening the definition of financial hardship to capture a wider set of circumstances, better promotion of financial hardship assistance, requirements to offer financial hardship customers a minimum of 6 different options for assistance, and stronger protections for customers facing credit management actions.
The enforcement action signals a toughening regulatory stance as the sector grapples with cost-of-living pressures affecting consumers across Australia.
Anyone who needs assistance paying their telco bills is encouraged to contact their provider and ask for help. More information about telco financial hardship rules can be found on the ACMA website.
