TIO: customer debt issues must be considered by telco providers
- 27 February, 2019 00:00
The Telco Industry Ombudsman (TIO) is calling on telco providers to consider their selling and credit assessment practises after recognising consumer issues with repaying debts.
According to the TIO’s Systemic Insight: Sales Practises Driving Consumer Debt, it revealed that 7,411 consumers made complaints to the TIO about problems managing their telco debt.
This represented 10.2 per cent of complaints made from 1 January to 31 June 2018, and included 2,221 complaints about financial hardship or repayment arrangements, and 2,371 complaints about the barring, suspension and disconnection of services.
During its findings, the TIO uncovered that some providers failed to assess a customers ability to pay, and focused on sales staff achieving sales more so than whether or not the product is really suitable for the customer; or selling multiple devices without checking the customer’s financial capability to afford the additional costs.
“Smartphones and internet data services are an important part of daily life for most Australians," Ombudsman Judi Jones said. "The telecommunications industry should ensure it offers credit responsibly because financial over-commitment is a problem that can cause considerable consumer detriment.
"Consumers can now use their telco plan to pay off accessories such as drones, headphones, and smart watches.
"If a consumer went to a bank and asked for a $3,000 loan, the bank checks the consumer’s capacity to repay that loan.
"Our recommendations in this report call on providers to consider how they can improve selling and credit assessment practices to ensure fair outcomes for their customers."
The TIO is encouraging providers to implement the recommendations in the report and to further address problematic sales practices.
Specifically, these recommendations include making reasonable enquiries about a customer’s financial situation prior to selling a post-paid plan, and assess the customer’s ability to meet minimum charges over the plan’s contractual term.
They should also deliver regular staff training in recognising and supporting vulnerable and disadvantaged customers, as well as ensuring sales training includes a focus on ethical selling.
Implement extra safeguards where customers are purchasing multiple or additional post-paid plans. At a minimum, safeguards should include removing or reducing automatic credit pre-approvals for customers solely based on their past payment history; and asking whether the customer will be the principal end user for each post-paid plan.
If the customer will not be, explain they remain liable for all of the costs of the plan.
They should also prohibit account representatives from signing up for post-paid plans without the account holder’s knowledge.
In October, the TIO released its 2017/2018 report that displayed customer service, service and equipment fees, service delivery and delays, were the top issues among consumers.
It further indicated consumers and small businesses made 167,831 complaints in the past financial year about telco providers, increasing 6.2 per cent.