EXPLANATORY STATEMENT

Approved by the Australian Communications and Media Authority

Telecommunications Act 1997

Telecommunications (Financial Hardship) Industry Standard 2024

Authority

The Australian Communications and Media Authority (the ACMA) has made the Telecommunications (Financial Hardship) Industry Standard 2024 (the Standard) under subsection 125AA(1) of the Telecommunications Act 1997 (the Act) and in accordance with sections 5, 6 and 7  of the Telecommunications (Financial Hardship Industry Standard) Direction 2023 (the Direction).

The Minister for Communications (the Minister) has the power under subsection 125AA(4) of the Act to direct the ACMA to:

(a)           determine a standard under subsection 125AA(1) of the Act that:

(i)          applies to participants in a specified section of the telecommunications industry;

(ii)          deals with one or more specified matters relating to the activities of those participants; and

(b)           do so within a specified period.

The Direction was given to the ACMA by the Minister under subsection 125AA(4) of the Act and commenced on 6 September 2023. The Direction requires the ACMA to determine an industry standard under subsection 125AA(1) of the Act that deals with: 

>        information to be provided and made available by carriage service providers (CSPs) to customers relating to financial hardship matters; and

>        the support provided by CSPs to customers who are, or may be, experiencing financial hardship.

The Standard meets the objectives and content requirements in sections 5, 6 and 7 of the Direction and in accordance with subsection 5(2) of the Direction it was determined by 15 February 2024 and commences in full at the earliest practical opportunity on 29 March 2024.

Purpose and operation of the instrument

Background

Telecommunications services are essential to everyday living. Connection and access to reliable and affordable phone and internet services is necessary for work, education, health, government services and social connection.

The telecommunications landscape has changed substantially since the introduction of the Act and other key legislation in 1997. Many of the existing safeguards, including the C628:2022 Telecommunications Consumer Protections Code (the TCP Code), are built on a legislative framework initiated at a time when telecommunications services were not seen as the essential services they are today, and the telecommunications market was much less diverse.

The type of regulation should match the importance that telecommunications services play in Australians’ lives.

Research and reports over the past 4 years, from both the ACMA and a range of other key stakeholders, confirm financial hardship is a significant problem and that existing safeguards were not meeting reasonable consumer expectations.

Supporting consumers experiencing financial hardship so that they can retain access to their telecommunications service has become a priority. With current safeguards not operating to adequately protect these consumers, stronger measures are required.

The Minister’s Direction to the ACMA was given to ensure that appropriate support is made available to consumers through directly enforceable rules as soon as practicable.

Purpose

The Standard requires CSPs (defined in section 5 as ‘providers’) to support customers who are (or may be) experiencing financial hardship through early identification and appropriate assistance. The Standard deals with information and support that is to be provided, and made available to customers and potential customers, relating to financial hardship matters. The Standard has regard to the essential nature of telecommunications services with a focus on keeping customers connected to services appropriate to their needs. The Standard is also designed to help customers experiencing financial hardship to maintain access to devices and equipment that enable connection to telecommunications services – noting that debt and associated financial hardship can relate to telecommunications goods (for example, mobile handsets) that a customer has acquired from a CSP.

Operation

The Standard has been made to fulfil the requirements of the Direction.

Part 1 sets out important information about the commencement, purpose and application of the Standard. The Standard applies to CSPs that deal with residential, small business and not-for-profit customers. This Part includes the definitions which set the scope for the application of the Standard and ensure it is clearly understood and consistently applied.

Part 2 requires CSPs to establish and comply with their payment assistance policies and sets out the minimum requirements for the accessibility, promotion, content and review of those policies. 

Part 3 sets out minimum requirements for CSPs in giving financial hardship assistance to customers for providing advice and information to financial hardship customers, including when and how providers must tell them about payment assistance policies, identifying financial hardship customers and assessing eligibility for financial hardship including criteria, timeframes, options, communication of outcomes and review.

Part 4 sets out the minimum requirements for when and under what circumstances credit management can and cannot be taken by a CSP in relation to customers in financial hardship.

Part 5 sets out the minimum requirements for CSPs to implement processes and train personnel to ensure compliance with the Standard. It also imposes obligations on providers to review how their personnel interact with financial hardship customers and the effectiveness of training.

Part 6 requires a provider to keep specified records of its financial hardship arrangements with customers, and other records sufficient to demonstrate its compliance with Parts 2 to 5 of the Standard for a set period and make those available to the ACMA on written request. It also includes obligations in relation to the retention of records and the collection, disclosure and disposal of personal information.

Part 7 confers powers and functions on the Telecommunications Industry Ombudsman (TIO) in respect of consumer complaints about the matters set out in the Standard.

Part 8 sets out transitional arrangements for complaints relating to a financial hardship provision of a relevant industry code, and applications for financial hardship assistance, made prior to the commencement of the Standard.

A provision-by-provision description of the Standard is set out in the notes at Attachment A.

The Standard is a legislative instrument for the purposes of the Legislation Act 2003 (the LA) and is disallowable.

Documents incorporated by reference

The Standard incorporates or refers to the following Acts and legislative instruments (including by the adoption of definitions), which are available free of charge on the Federal Register of Legislation (http://www.legislation.gov.au) (the Register):

The Acts and the Direction listed above are incorporated as in force from time to time, in accordance with section 10 of the AIA, subsection 13(1) of the LA and section 589 of the Act.

Part 8 of the Standard deals with transitional arrangements, and refers to a ‘relevant industry code’, being an industry code of practice registered under Part 6 of the Act.

To the extent that an industry code meets the definition of a ‘relevant code’ under section 5 of the Standard, such a non-legislative instrument is incorporated as in force from time to time in accordance with subsection 14(1) of the LA and section 589 of the Act.

Industry codes of practice registered under Part 6 of the Act are available free of charge on the ACMA’s register of codes and standards (https://www.acma.gov.au).

Consultation

Before the Standard was made, the ACMA was satisfied that consultation was undertaken to the extent appropriate and reasonably practicable, in accordance with section 17 of the LA and subsection 125AA(3), and sections 132, 133, 134 and 135 of the Act.

The ACMA consulted with Communications Alliance (being a body that represents the telecommunications industry), the TIO, the ACCC, Information Commissioner, ACCAN (being a body that represents the interests of consumers), industry stakeholders, consumer groups and the public on the making of the Standard. Between 23 October and 24 November 2023, the ACMA conducted a public consultation process, through the release of a draft Standard and a consultation paper on the ACMA’s website.

On 24 October 2023, the ACMA also published a notice in The Australian newspaper, being a newspaper circulating nationally. It stated that the ACMA has prepared a draft Standard, advising that a copy of could be accessed via the ACMA’s website and inviting interested persons to give written comments by 24 November 2023.

The ACMA informed key stakeholders of the publication of the documents and invited comment on the draft of the Standard and on the issues set out in the accompanying consultation paper.

The consultation paper sought comment on several key issues included in the draft Standard as well as inviting general comments. The ACMA received 14 submissions from a range of stakeholders including the telecommunications industry, consumer advocates, individual consumers and government agencies. The ACMA considered all relevant issues raised by the submissions in the consultation process when making the Standard.

All non-confidential submissions were published on the ACMA website after the Standard was made.

The submissions provided a broad range of feedback on the draft Standard and the ACMA considered all relevant issues raised by the submissions in the consultation process when making the Standard. Key issues raised by different cohorts of stakeholders included the following:

Regulatory impact assessment

The ACMA prepared an Impact Analysis (IA) included at Attachment C. The Office of Impact Analysis (OIA) assessed the IA as compliant with good practice (OIA reference number: 05109).

Statement of compatibility with human rights

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker in relation to a legislative instrument to which section 42 (disallowance) of the LA applies to cause a statement of compatibility with human rights to be prepared in respect of that legislative instrument.

The statement of compatibility with human rights set out in Attachment B has been prepared to meet that requirement.

Attachment A

Notes to the Telecommunications (Financial Hardship) Industry Standard

Part 1 – Preliminary

Section 1 Name

This section provides for the industry standard to be cited as the Telecommunications (Financial Hardship) Industry Standard 2024 (the Standard).

Section 2 Commencement

This section provides for the Standard to commence on 29 March 2024.

Section 3 Authority

This section identifies the provision of the Act that authorises the making of the Standard, namely subsection 125AA(1) of the Telecommunications Act 1997 (the Act) and notes that it has been determined in accordance with sections 5, 6 and 7 of the Telecommunications (Financial Hardship Industry Standard) Direction 2023.

Section 4 Application of industry standard

This section provides for the Standard to apply to participants in the telecommunications industry being carriage service providers who supply telecommunications products to residential, small business and not-for-profit customers.

Section 5 Definitions

This section defines key terms used throughout the Standard.

Some other expressions used in the Standard are defined in the Act.

Section 6 References to other instruments

This section provides that in the Standard, unless the contrary intention appears:

• a reference to any other legislative instrument is a reference to that other legislative instrument as in force from time to time; and
• a reference to any other kind of instrument is a reference to that other instrument as in force from time to time.

Part 2 – Payment Assistance Policy

Section 7 Establish, comply with and review payment assistance policy

This section imposes requirements on CSPs (defined in section 5 as ‘providers’) to establish and comply with a payment assistance policy that meets the minimum requirements set out in sections 8, 9, 10, 11, 12 and 13 of the Standard.  This does not prevent the payment assistance policy from including additional information.

Payment assistance policies are required to be approved by a CSP’s Chief Executive Officer or equivalent in terms of decision making and accountability.  This person is also responsible for its implementation and operation.

Payment assistance policies must be reviewed each year and, where relevant, changes made to ensure appropriate information and support is provided, and made available to customers and potential customers, relating to financial hardship matters.

Section 8 Minimum requirements – accessibility and promotion

This section sets out the minimum requirements a CSP must meet regarding the accessibility and promotion of the payment assistance policy.

Subsection 8(1) sets out requirements which are intended to ensure that a CSP’s payment assistance policy is accessible for all consumers, including consumers with disabilities and from culturally or linguistically diverse backgrounds. It requires a CSP’s payment assistance policy to be in writing, be current, accurate, easy to understand and use a font size that is clear and easy to read. This means that payment assistance policies should avoid both language and formatting that may cause confusion for consumers, for example: overly complex or legal language, fine print and/or closely spaced type that make it difficult to read. It also requires a CSP to make the payment assistance policy, information about how to make an application for payment assistance and a summary of the payment assistance policy available to the public on:

• the CSP’s website via a direct hyperlink from the homepage; and
• the CSP’s app if the provider uses an app.

It is expected that links to the information about the payment assistance policy should be easy to find and read, and clearly labelled, so that customers and potential customers who may be having financial difficulties can quickly and easily find the information they need to assist them. Language used to identify those links should give due consideration to the potential stigma associated with the use of financial hardship. Examples of less alienating language may include phrases such as ‘payment difficulties’ or moving to a strengths-based approach by choosing the terms ‘support’ and ‘assistance’ and ‘enhanced care’.

Subsection 8(2) requires a CSP to make any application form it uses for payment assistance available to the public from the same location as the payment assistance policy is made available under subsection 8(1). For example, a link on the home page for ‘payment assistance’ may go directly to the page that has the provider’s payment assistance policy, summary of that policy and application form . This only applies where the CSP has an application form for customers seeking payment assistance; it does not place an obligation on the CSP to create an application form.

Section 9 Minimum content requirements - general

This section sets out the minimum content requirements for a CSP in its payment assistance policy which is intended to assist customers to remain connected to appropriate services for their needs, minimise debt and reduce unaffordable payment options.

Section 9 requires a CSP’s payment assistance policy to be focussed on the needs and expectations of financial hardship customers, to set out the CSP’s processes for assisting financial hardship customers, and to explicitly state that customers have a right to apply for financial hardship, free of charge and that disconnection is a measure of last resort.

It also provides for the payment assistance policy to identify when and how a customer can contact the CSP regarding an application for assistance. A telephone number and one other method of contact (for example, email or instant messaging via an app) are required wherever a customer has the option of contacting a CSP by telephone as part of its ordinary operations, including for sales or any other enquiries. If the CSP does not ordinarily make a telephone number available to the public for customers, it must provide at least two separate methods of contact. Irrespective of the method, any contact provided for payment assistance should offer real time/real person contact that is not a bot, or Artificial Intelligence (AI), and who is authorised to make decisions relating to payment assistance applications.

In situations involving domestic and family violence victim survivors, every effort should be made for the customer to be able to speak to the same staff member throughout their engagement to avoid having to repeat information or recount their circumstances more than once.

A CSP is required to include information on support services for customers in financial hardship in its payment assistance policy, including how the customer can contact both financial counselling services and the Telecommunications Industry Ombudsman (TIO). An example of a financial counselling service that was available at the time the instrument was made is the National Debt Hotline - https://ndh.org.au/ (NDH).

Section 10 Minimum content requirements - applications

This section provides that a payment assistance policy must set out how a customer can make an application and monitor its progress, including a copy the application form if the CSP has one. As with section 8, this only applies where the CSP has an application form, and it does not place an obligation on the CSP to create an application form. Under this section a CSP must allow customers to apply for assistance using all contact methods the CSP usually makes available to its customers for contacting it. Where a CSP’s application form may be incompatible with a particular contact method (for example, an online form and a telephone contact) – a CSP should minimise the need for additional steps on the customer by taking the necessary information over the phone and filling out the form on their behalf.

The CSP is also required to ensure that processes for making an application are accessible to consumers in vulnerable circumstances including consumers with disabilities, from culturally or linguistically diverse backgrounds or with other special needs, such as domestic and family violence victim survivors. For example, offering the payment assistance policy and applications form (if applicable) in common community languages such as Arabic, Greek, Vietnamese and Mandarin, including information about translation services that may be available, or including the number of an interpreter service.

Section 11 Minimum content requirements – assessment of applications

This section sets out the minimum requirements for a payment assistance policy for information about the assessment of a customer’s eligibility for financial hardship assistance.

The payment assistance policy must set out the steps and criteria for assessing eligibility in accordance with section 16, the timeframes for assessment at section 17 and include information about the available options for assistance.

The Standard requires that the payment assistance policy must not include multi-step processes or mechanisms that unreasonably delay or prevent a customer from applying or being assessed for eligibility to receive financial hardship assistance. This is intended to prevent complex processes, unnecessary steps or delays and encourage swift assessment and provision of assistance.  It does not require that a CSP offer a single step process.

Section 12 Minimum content requirements – complaints and review

This section provides that a payment assistance policy must include information about how customers can make complaints about or seek reviews of decisions in relation to applications for payment assistance.

Information should include a clear statement of where and how a customer could make a complaint and/or request a review of a decision relating to payment assistance, including the relevant contact details.

A customer may make a complaint, including a complaint to the TIO at any time during the process. This does not prevent a customer from agreeing to an arrangement for financial hardship assistance.

Section 13 Minimum content requirements – payment assistance policy summary

This section sets out the minimum information that must be included in the payment assistance policy summary required by subparagraph 8(1)(g)(ii). The payment assistance policy summary is intended to help customers and potential customers who may be facing financial difficulties find key information with minimal effort, about what support is available to them from a CSP and whether they are likely to be eligible for that support.

Paragraph (a) sets a 500 word limit and requires that the font be in a style that is clear and easy to read. This is to facilitate a customer’s ability to identify and understand key points so they can more easily recognise when they may be eligible for payment assistance and what options are available to them.

Paragraphs (b) – (d) set out the minimum information required including that customers have a right to apply for long-term or short-term assistance free of charge, how financial hardship is defined, how to apply, what options for assistance the CSP offers, how to make a complaint and how to contact a financial counselling service and the TIO.

The payment assistance policy summary is not intended to replicate the payment assistance policy in full. However, for clarity it is expected that definition of financial hardship would accurately reflect what is set out in the Standard and the payment assistance options required by the Standard should be included. In relation to the requirement to set out how the customer can contact both financial counselling service and the TIO, a telephone number and website would be sufficient for the summary (e.g. the NDH).

Part 3 – Financial Hardship Assistance

Section 14 Minimum requirements – identifying financial hardship customers

This section requires a CSP to take all reasonable steps to identify financial hardship customers as early as possible by following the steps in section 15 and by making reasonable efforts to communicate with customers in writing when it becomes aware the customer has:

• more than 2 consecutive overdue bills;
• a total of 3 overdue bills in the previous 6 month period; or
• an arrears of more than $200.

A CSP may become aware of these circumstances through its own actions, for example through internal notifications or systems alerts. Alternatively, a CSP may become aware of these circumstances through others actions, for example, contact from a bank or from the customer, or from an authorised representative or advocate acting on behalf of the customer.

Section 15 Minimum requirements - communicating with customers

Subsection 15(1) sets out how a CSP must communicate with financial hardship customers and provide them with advice and assistance about the CSP’s payment assistance policy. It includes requirements to discuss options for assistance, processes and timeframes and to provide advice on how to make an application and provide contact details for a customer to reach a person authorised to deal with financial hardship matters.  This can be general contact information (i.e. it is not required to be the contact details of an individual) but it must allow for the customer to have real time/real person contact with a person that is not a bot, or AI, and who is authorised to make decisions relating to payment assistance applications.

A CSP is also required to assist customers with accessibility needs including customers with a disability, domestic and family violence victim survivors, customers from culturally or linguistically diverse backgrounds, including First Nations customers or with other special needs, in making an application. Staff should offer to assist financial hardship customers in making an application and not wait to be asked.

Subsection 15(2) sets out circumstances that may indicate that a customer is a financial hardship customer for the purposes of subsection 15(1) and is intended to assist a CSP to determine when a customer may be in financial hardship. This is a non-exhaustive list of circumstances which should be considered in accordance with section 14 when considering whether they have taken all reasonable steps to identify financial hardship customers as early as possible.  While customers in these circumstances may not always be in financial difficulty, they often indicate a customer is in need of financial hardship assistance.

Subsection 15(3) provides that a CSP must give a copy of the payment assistance policy and application form (if any) as soon as practicable after the customer advises a CSP they wish to apply for assistance, upon request by a customer or if the customer has accepted an offer from a CSP for the payment assistance policy or application form. This must be provided by a method that meets the consumer’s needs. For example, a consumer may prefer a hyperlink or copy via post or email and a CSP must provide it in that form.

Subsection 15(4) sets out minimum requirements on what information about its payment assistance policy and options for assistance must be included in any written bills or reminder notices sent to customers by a CSP under section 14. This is intended to assist customers who are more likely to be experiencing financial hardship, so they have access to pertinent information at the time when they are most likely to need to consider whether it is relevant to their current situation.

Subsection 15(5) places a requirement on a CSP to use the customer’s preferred method of contact for receiving written communications to increase the likelihood that the information will be seen and read by the customer.

Section 16 Minimum requirements - assessing eligibility

This section sets out the minimum requirements for assessing eligibility for financial hardship assistance including when a customer is eligible, and under what circumstances and conditions a CSP can request information from a customer in support of an application for assistance.

Subsection 16(1) provides that any customer that meets the definition of financial hardship and wishes to access the options for assistance made available by the CSP is eligible. This is intended to assist customers facing financial hardship remain connected to appropriate services for their needs.

Subsection 16(2) prevents a CSP from requesting a customer to provide information or proof of the financial hardship if the application is for short-term assistance or the customer appears to be a victim survivor of domestic or family violence. It also prevents a provider from seeking information that is irrelevant to the application or unreasonably onerous (for example, past bank statements which may have no relevance to current ability to pay).

Subsection 16(3) allows a CSP to request a customer to provide information to show that they are in financial hardship if the arrangement will be for long-term assistance and one or more of the following circumstances applies:

• the amount to be repaid is over $1000;
• the customer has been a customer of the CSP for less than 2 months; or
• the CSP reasonably believes there is a possibility of fraud.

While a CSP is allowed to request information from a customer to demonstrate financial hardship in the above circumstances it is not required to do so. A CSP should exercise discretion and sensitivity in choosing when to request evidence of financial hardship. This is particularly important in circumstances of vulnerability such as domestic or family violence where evidence of financial hardship should not be sought as it may place an unreasonable burden on the customer.

Information requested under subsection 16(3) should only be kept for the time needed to complete the assessment for eligibility. It must then be destroyed or disposed of in accordance with subsection 30(2).

Subsections 16(4) and (5) set out what a CSP must do when it requests information from a customer to show that they are in financial hardship under subsection 16(3). This includes providing a contact with whom the customer can discuss the request, details about how any written information can be presented and sighted and methods for the customer to provide the requested information which must include email, an electronic method, a physical address, and if the customer has special needs, a method suitable to meet those needs. These subsections also require a CSP to provide the customer with specific information (in writing or another method suitable to the customer’s needs) about how the information will be used and kept and offer the customer sufficient time to locate and present the information for sighting.

Subsection 16(6) imposes a privacy safeguard on CSPs by limiting requests for information under subsection 16(3) to information that it is strictly necessary to conduct the assessment for financial hardship. A CSP should consider carefully whether evidence is needed, particularly when dealing with a customer who is a domestic and family violence victim survivor, has a disability, is from a culturally or linguistically diverse background or has other special needs.

Subsection 16(7) requires a CSP to establish a process for information to be presented and sighted by personnel who are authorised for assessing eligibility for financial hardship assistance. Any process must ensure that this information is only kept for as long as it is required to complete the assessment for eligibility before being securely destroyed or disposed of under subsection 30(2).  This is intended as a privacy safeguard to ensure that providers have secure processes in place where a CSP is dealing with sensitive personal information relating to financial hardship.

Section 17 Minimum requirements – timing for assessments and advice on outcomes

This section sets out timeframes for a CSP to assess an application and inform the customer of the outcome. It requires that an assessment be completed as soon as practicable but allows for a maximum of 5business days after receiving a complete application. Customers must be informed of the outcome of the assessment as soon as possible but no later that 2 business days after it is completed.

These timeframes are the maximum allowed. A CSPs should aim to assess and advise customers of outcomes in a shorter period, if possible.

Under section 17 a CSP must advise the customer immediately if it becomes aware that it cannot  provide financial assistance because the customer either does not meet the definition of financial hardship or does not wish to access the options for assistance made available by the CSP.

Section 18 Minimum requirements – options for assistance

This section sets out the minimum options for assistance that a CSP must make available for customers that are realistic, appropriate and tailored to suit the needs of the customer. This includes offering payment plans and other assistance options to a customer experiencing financial hardship that are appropriate and tailored to the individual customer’s circumstances, and give a customer the best chance of retaining a service and paying their debt.

Under subsection 18(1) a CSP is required to offer 6 of the options listed in paragraphs (a) to (l) of the definition of ‘options for assistance’ in section 5.  These options are:

(a)           temporarily postponing, extending or deferring the time for paying a bill;

(b)           discounting a bill charge;

(c)           applying a credit to the customer’s account;

(d)           waiving a debt;

(e)           payment plans which are tailored to meet a customer’s ability to pay;

(f)            establishing an arrangement whereby the provider matches payments made by the customer or gives credit in exchange for payments made by the customer;

(g)           controls on how a customer can incur charges with the provider, including spend controls;

(h)           restrictions;

(i)            removing non-essential features of a telecommunications product at no cost; 

(j)            transferring the customer to a different telecommunications product that better suits their circumstances;

(k)           adjusting internal threshold limits so that the customer is not disconnected; or

(l)            offering a free non-automatic payment method. 

The options referred to in paragraphs (a) and (e) from the definition of ‘options for payment’ (extracted above) are mandatory and must be offered by a CSP. The other 4 options that a CSP is required to offer must be selected from the ‘options for assistance’ as defined in section 5, but it is up to a CSP which of the remaining options to select. Six options for assistance are the minimum number of options that a CSP must offer. However, the note to subsection 18(1) and the definition of ‘options for assistance’ make it clear that there is no limit on the number of options a CSP can offer or accept to help a financial hardship customer with their bills.

These options are intended to help customers find the best way to remain connected to appropriate services for their needs. This includes maintaining access to devices that enable connection to appropriate services – noting that debt and associated financial hardship can relate to equipment (for example, mobile handsets) that a customer has acquired from a CSP.  

In discussing options, a CSP cannot have a default option but must offer all available options to a customer who is seeking assistance so that the most appropriate and tailored solution for their circumstances can be found.

For example, one way to tailor a solution to meet the needs of the individual could be to offer the customer the payment method of their choice, which should be provided free of charge. Other examples include setting payment schedules to suit pay periods – weekly, fortnightly or monthly and offering plans with small frequent payments or larger less frequent payments depending on the customer’s circumstances.

Subsection 18(2) requires a CSP to take a customer’s individual circumstances and capacity to pay into account when tailoring an option to suit the needs of a customer. For example, if a CSP is offering a payment plan to a customer it cannot use a standard set rate for repayment but must consider a customer’s individual circumstances and capacity to pay when setting a repayment rate and schedule.

Pre-paid plans are often considered a viable option for customers in financial hardship. While it is recognised that these may be a suitable option for some customers there is a risk that they can cause additional hardship for customers for a variety of reasons, including the need to bring your own device, and potentially higher costs over the long term. Therefore, particular focus should be on meeting a customer’s needs when considering transferring them to a different telecommunications product as a way to assist them with financial difficulties.

Section 19 Acceptance and commencement

This section requires an arrangement for financial hardship assistance to commence as soon as the customer tells a CSP they agree to the arrangement.

This means that the financial hardship arrangement is active. It does not require all actions within the arrangement to be actioned at the time of commencement. For example, the arrangement may relate to the acceptance of a credit which will alleviate the debt. The arrangement commences when the customer accepts it, making the debt null from that date but the credit may not appear on the customer’s account until the end of the following billing cycle.

Section 20 Minimum requirements – communicating arrangements

This section sets out the minimum requirements for the information and advice a CSP must give a customer when the customer has agreed to an arrangement for financial hardship assistance. It requires a CSP to give the customer written notice of the details of the arrangement including the customer’s rights and obligations under the arrangement, the duration of the arrangement and the circumstances under which credit management may be taken. This notice must be given within 2 business days after the customer and CSP agree to the arrangement, and notify the customer of their obligation to advise the provider of changes to their situation within 14 days of that change and of the customer’s ability to seek a review if their financial hardship situation changes.

This is intended to ensure that both customer and the CSP have a clear, mutual understanding and record of what is agreed and expected at the beginning of any arrangement.

As noted, there is a requirement for customers to advise the CSP if their situation changes during the term of their arrangement within 14 days of the change in their situation. Where a CSP becomes aware that a customer’s situation has changed, but the customer has failed to notify it, this is not considered sufficient reason to discontinue the arrangement. In such circumstances, a CSP must promptly contact the customer in accordance with subsection 22(2).

Section 21 No charge for financial hardship assistance

This section provides that a customer must not be charged by a CSP for financial hardship assistance. This includes ensuring there are no charges levied for the application, assessment, administration or access to financial hardship assistance or arrangements.

One of the intended effects of the Standard is to stop debt and associated issues escalating. Charging customers in financial hardship for assistance would undermine this intent by placing an additional financial burden on those that are already struggling to pay their bills.

Section 22 Review of arrangements for financial hardship assistance

This section sets out when a CSP must review a customer’s financial hardship arrangement. There is a requirement to review a financial hardship arrangement within 5 business days of being informed by the customer that their financial hardship situation has changed. A CSP is also required to contact the customer and offer to review the financial hardship arrangement where the customer has not complied with an agreed term.

This section is intended to ensure that arrangements between a CSP and a customer remain practical and affordable and offer the customer the best opportunity to meet their financial debt while remaining connected. For example, customers who are on low incomes or experience employment insecurity may require a review to an ongoing payment plan to take account of a change in situation, such as an unexpected expense or fewer hours of work.

Part 4 – Credit Management Action

Section 23 Minimum requirements – assessing credit management action

This section sets out minimum requirements for assessing whether a CSP can take credit management action. The intention is to ensure that, before a CSP takes credit management action against a customer, that customer has been considered for financial assistance.

Subsection 23(1) provides that a CSP must take all reasonable steps to determine if the customer is in financial hardship. In determining whether all reasonable steps have been taken, it is expected that a CSP should consider whether it has complied with the requirements of the Standard, in particular those set out in Part 3.

Subsection 23(2) provides that if a customer is determined to be a financial hardship customer, a CSP must offer the customer financial hardship assistance that is suitable for the customer’s situation and must take all reasonable steps to keep the customer’s telecommunications service connected having regard to the essential nature of carriage services.

Section 24 Minimum requirements – taking credit management action

This section sets out the minimum requirements for a CSP with regard to taking credit management action against a financial hardship customer.

Subsection 24(1) prohibits a CSP from taking credit management action against a customer while the customer is discussing options or has made an application for financial hardship assistance or has a financial hardship arrangement on foot, unless certain conditions have been met. These conditions are set out in subsection 24(2).

Subsection 24(2) allows for credit management action to be taken against a financial hardship customer if the customer has not met their obligations under the arrangement for financial hardship assistance, a CSP has taken steps to review the arrangement under section 22 and one of the following applies:

• the CSP has taken reasonable steps to contact the customer, or the customer has contacted the CSP to discuss options for payment before taking credit management action;
• the CSP has a genuine reason to believe that the customer is unable or unwilling to pay their debts, to prevent a further increase in the debt owed by the customer;
• the customer agrees that the financial hardship arrangement is unable to be completed; or
• the provider has been unable to contact the customer, despite taking reasonable steps to do so.

Consistent with the obligations to tailor assistance set out in section 18, discussions about payment options referred to in section 24 and reviews under section 22 should take account of a customer’s individual circumstances and capacity to pay. It is considered that a CSP cannot satisfy these requirements by providing a ‘take it or leave it’ offer which is reasonably outside the customer’s ability to meet.

Subsections 24(3) and (4) impose requirements on CSPs to take reasonable steps to contact the customer and set out what must be communicated. This requires 3 separate attempts, on different business days, over a period of not more than 10 calendar days and using 2 different methods of communication (with at least one method being in writing). Written communication may include via letter, email or SMS. Written communication is to include advice that the contact is about credit management action which may include restriction, suspension or disconnection. This is to ensure that the customer has sufficient warning of potential credit management action, including the potential for disconnection.

Where a CSP is able to take credit management action against a financial hardship customer, subsection 24(5) sets out the steps a CSP must follow. This includes only using suspension or disconnection as a measure of last resort and giving the customer a written notice, which includes specified information at least 10 business days before taking that action. The written notice must state what action is being taken, when it will occur, what charges may apply, the reasons for taking the action, any impacts such action will have on other telecommunications products and details for a contact point, the TIO and financial counselling services (e.g. the NDH).

Section 25 When debts cannot be sold

This section provides that a CSP cannot sell a debt owed by a customer while:

• the customer is discussing options for financial assistance;
• the customer has made an application for financial hardship assistance;
• the customer has an arrangement for financial hardship assistance with the CSP; or
• the CSP is reviewing an arrangement for financial hardship assistance.

This is intended to prevent debts being sold for financial hardship customers who are actively engaged in the process of seeking or receiving financial hardship assistance, whether or not the customer is in the early stages of a discussion on arrangements, has made an application, has an existing arrangement or their arrangement is being reviewed.

Part 5 – Processes, training and monitoring

Section 26 Processes for personnel

This section requires a CSP to implement written processes and procedures for its personnel to ensure compliance with the Standard.

These written processes and procedures are intended to be internal documents for CSP’s personnel. They must be in writing but may be in hard copy or electronic (i.e. intranet, web accessible) form. ‘Personnel’ is defined in section 5 of the Standard to include staff or contractors engaged by or on behalf of a provider.

Section 27 Training for personnel

This section sets out the requirements for providing financial hardship training to personnel. It requires a CSP to deliver training to those of its personnel who deal directly with consumers about the CSP’s payment assistance policy, financial hardship processes and procedures and the requirements of Parts 1 – 6 of the Standard. The training may be delivered by a third party on behalf of the CSP and must include an assessment component which is intended to ensure that staff can demonstrate their knowledge and understanding of their obligations.

Personnel are required to receive training either within 3 months after commencement of the Standard for those that deal directly with consumers at the time the Standard commences, or prior to dealing directly with consumers if they are not yet doing so when the Standard commences. This is intended to provide a 3 month window to provide training for existing personnel. New staff that start after the Standard commences are required to receive financial hardship training before they start dealing directly with consumers. All personnel must receive refresher training annually after their initial training to promote better awareness of financial hardship and ensure they continue to be conscious of the relevant information and requirements.

Section 28 Monitoring and review

Subsection 28(1) requires a CSP to regularly monitor how its personnel interact with financial hardship customers to ensure they understand the CSP’s payment assistance policy, and financial hardship processes and procedures and their obligations under the Standard.

Subsection 28(2) requires a CSP to conduct an annual review of the effectiveness of its financial hardship training and make changes to ensure it is fit for purpose.

This section is intended to ensure that CSPs monitor interaction of personnel with financial hardship customers throughout the year to evaluate performance and compliance with the requirements of the Standard. Training is required to be reviewed and amended as necessary annually to reflect outcomes of these evaluations and to improve personnel interactions with financial hardship customers where possible and improve compliance as necessary. The annual review of financial hardship training is the minimum requirement. More frequent reviews are at a CSP’s discretion.

Part 6 – Record keeping

Part 6 of the Standard imposes certain record keeping requirements on CSPs relating to their dealings with customers about financial hardship matters. These records include personal information, including details of customers and communications between the CSP and customers, which are required to be kept for at least 2 years, and be made available to the ACMA by written request. Further descriptions are set out below.

The Privacy Act 1988 (Privacy Act) applies to the ACMA and the ACMA’s administration of the Standard, including any records requested under section 30. The ACMA is subject in all relevant respects to the Privacy Act and the Australian Privacy Principles, has a formal Privacy Management Plan, and takes all the usual precautions and other measures which a Commonwealth Government agency is required to take in order to safeguard personal information that comes into its custody and care.

If a CSP is an ‘organisation’ within the meaning of the Privacy Act, then it may have to comply with the Australian Privacy Principles in the collection, use and disclosure of personal information.  A CSP will not be an ‘organisation’ under the Privacy Act if, among other things, they are a ‘small business operator’. Section 6D of the Privacy Act sets out how to work out whether a person is a ‘small business operator. In essence, a business is a small business at a time in a financial year if its annual turnover for the previous financial year was $3 million or less or, if it is a new business, its annual turnover for the current financial year is $3 million or less.

Most CSPs are subject to the Privacy Act regarding the personal information they handle in accordance with the Standard. In any event, it is expected that any personal information collected under the Standard would usually be provided with the consent of the consumer wishing to make an application for financial hardship assistance. Further, section 31 of the Standard imposes requirements on CSPs that are not covered by that Act, to ensure that relevant personal information is keep confidential and not disclosed to third parties except: as required to manage a complaint with the TIO or the ACMA; with the express consent of the consumer; or where disclosure is otherwise required or authorised by law.

It is also noted that the C628:2022 Telecommunications Consumer Protections Code imposes requirements on all CSPs to have robust procedures for storing their customers’ personal information, and to keep that information secure. The Australian Information Commissioner has recognised the TIO as an entity that may handle a complaint breaching these requirements.

The Office of the Australian Information Commissioner recommends that as a matter of best practice, businesses not subject to the Privacy Act should consider whether to opt-in to the Privacy Act (for further information see: www.oaic.gov.au).

Section 29 Requirements to keep records

Subsection 29(1) requires CSPs to keep records of financial hardship arrangements. When a customer enters a financial arrangement with a CSP, the provider must keep a record of the customer’s name and contact details, as well as assigning a unique reference number or similar identifier for proper identification of each arrangement and its subject matter.

Under this subsection, the CSP’s records of financial hardship arrangements must include:

• dates of any oral communications with the customer;
• copies of any correspondence sent to or received from the customer regarding the arrangement;
• a copy of the customer’s application;
• copy of any request made to a customer under subsection 16(3);
• a record of the customer’s acceptance of the arrangement; or
• the notice given to the customer under section 20.

Records of financial hardship arrangements includes all agreements made with a financial hardship customer for payment assistance to help them to continue to access their telecommunications products or to pay a debt owed to the provider. Records do not include information provided by a customer in response to a request made by the CSP under subsection 16(3).

Subsection 29(2) requires CSPs to keep records of:

• credit management actions taken against a customer, including the associated communication made to the customer regarding proposed credit management actions; and
• documentation sufficient to demonstrate compliance with requirements related to the CSP’s payment assistance policy and processes, procedures and training for its personnel.

Subsection 29(3) requires CSPs to take reasonable steps to protect information stored under section 29 from misuse, interference and loss, unauthorised access, modification or disclosure. Additionally, CSPs must ensure information is securely disposed or destroyed when the record is no longer needed, in accordance with the Standard or any other applicable laws.

The intention is to ensure this information is protected, used and destroyed consistent with the requirements of the Privacy Act when no longer required in accordance with the Standard.

Section 30 Record retention

Subsection 30(1) imposes requirements on CSPs to keep records that are required to be kept under subsection 29(1) of the Standard for at least two years after the date the financial hardship requirement has expired, and records made under subsection 29(2) for at least two years from the date of creating the record and make those records available to the ACMA on request.

The TIO has reported complaints from consumers who say the CSP has no record of a financial hardship arrangement, or the financial hardship arrangement does not reflect what the customer believes was agreed. Clear record keeping assists in delivering fair, timely and reasonable outcomes in complaints handling, investigations and compliance and enforcement matters.

The ACMA may need to access customer records from a CSP under section 30 of the Standard for the purpose of its monitoring and enforcement activities.

Records are required to be kept for a minimum of two years. This aligns with record keeping timeframes in other like telecommunications safeguards instruments such as the Telecommunications (Consumer Complaints Handling) Industry Standard 2018 and ensures that records are available for an appropriate length of time to be of use in complaints handling, investigations, and compliance and enforcement action. 

Subsection 30(2) introduces further stipulations in the context of information requested from a customer to assess eligibility for financial hardship assistance under subsection 16(3). The CSP must only retain a copy or record of the information received from the customer for the duration required to complete the assessment, and following completion of the assessment, the provider must dispose of or destroy the copy or record of the information securely. 

Section 31 Privacy

This section sets out privacy considerations for a CSP not subject to the Privacy Act. In such cases, CSPs must ensure that personal information collected in connection with an application and a financial hardship assistance arrangement:

• is not disclosed to a third party or used unless required for managing a complaint to the TIO or the ACMA, or with explicit consumer consent, or when disclosure is mandated by law; and
• is disposed of or destroyed securely when no longer needed under the Standard or other applicable laws.

The note to this section makes it clear that a CSP that is subject to the requirements of the Privacy Act must adhere to Australian Privacy Principle 6 in Schedule 1 of that Act concerning the use or disclosure of personal information in connection with financial hardship assistance and arrangements.

Part 7 – Conferral of functions and powers

Section 32 Conferral of functions and powers on the TIO

This section specifies that the Standard confers on the TIO functions and powers in respect of customer complaints about matters referred to in the Standard.

These functions and powers include receiving; investigating; facilitating the resolution of; making determinations in relation to; and reporting on, customer complaints about matters in the Standard.

Part 8 – Transitional arrangements

Section 33 Complaints about compliance with a relevant industry code relating to financial hardship

This section sets out the transitional arrangements for complaints about financial hardship made prior to the commencement of the Standard. It provides that if a customer made a complaint to a CSP, the ACMA or the TIO alleging that a CSP had not complied with a provision of a relevant industry code relating to financial hardship, and that the complaint had not been dealt with and the code provision was in force immediately before the Standard commenced, then the complaint should continue to be dealt with in respect of the industry code.

The intention is to ensure that consumers with complaints about financial hardship that are outstanding at the time the Standard commences have their complaint finalised, even though the code or provision to which the complaint relates may have been superseded by the Standard.

Section 34 Applications for financial hardship assistance

This section provides that applications for financial hardship assistance made before, but not finalised when, the Standard commences will be dealt with under the Standard.

This means that if a customer has made an application for financial hardship assistance and there is no agreement regarding the financial assistance on commencement of the Standard, then a CSP must handle the application in accordance with the provisions of the Standard.

Section 35 Arrangements for financial hardship assistance

This section sets out the transitional arrangements for financial hardship arrangements that are in place at the time the Standard commences.

It sets a transitional period of 20 business days during which a CSP must review original financial hardship arrangements against its payment assistance policy established under section 7 of the Standard. Where the original arrangement does not comply with the policy, the CSP must make a written offer to the customer to replace the original arrangement with a new arrangement for financial hardship assistance that is consistent with the payment assistance policy.

The customer has 10 business days to accept the offer. If no response is received the customer will be taken to have declined the offer.

This provision is intended to ensure that customers with financial hardship arrangements that were made before the introduction of the Standard are not disadvantaged when compared with those who seek assistance after its commencement. 

Attachment B

Statement of compatibility with human rights

Prepared by the Australian Communications and Media Authority under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011

Telecommunications (Financial Hardship) Industry Standard 2024

Subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 requires the rule-maker in relation to a legislative instrument to which section 42 (disallowance) of the Legislation Act 2003 applies to cause a statement of compatibility with human rights to be prepared in respect of that legislative instrument.

The statement of compatibility set out below has been prepared to meet that requirement.

Overview of the Standard

The Telecommunications (Financial Hardship) Industry Standard 2024 (the Standard) has been made in accordance with the requirements set out in section 125AA of the Telecommunications Act 1997 and the Telecommunications (Financial Hardship Industry Standard) Direction 2023 (the Direction). It is drafted to meet the requirements and objectives in sections 5, 6 and 7 of the Direction. In broad terms, those requirements and objectives are to ensure carriage service providers (CSPs) proactively provide information and assistance to customers who are, or may be, experiencing financial hardship, having regard to the essential nature of telecommunication services.

The Standard applies to CSPs in their dealings with residential, small business and not-for-profit customers, and deals with requirements for CSPs to establish policies, and to provide information and assistance to customers relating to financial hardship.

Human rights implications

The ACMA has assessed whether the Standard is compatible with human rights, being the rights and freedoms recognised or declared by the international instruments listed in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011 as they apply to Australia.

Having considered the likely impact of the Rules and the nature of the applicable rights and freedoms, the ACMA has formed the view that the Rules engage the following rights or freedoms:

• The right to privacy in Article 17 of the International Covenant on Civil and Political Rights (ICCPR), which states:

1. No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.
2. Everyone has the right to the protection of the law against such interference or attacks.

• The right to freedom of expression in Article 19(2) of the ICCPR, which states:

2. Everyone shall have the right to freedom of expression; this right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of his choice.

• The following rights for persons with disabilities under the Convention on the Rights of Persons with Disabilities (the CRPD):
  • to access, on an equal basis with others, information and communications (Article 9); and
• the right to freedom of expression and opinion, including the freedom to seek, receive and impart information and ideas on an equal basis with others and through all forms of communication of their choice (Article 21).

Right to privacy

Article 17 of the ICCPR (like Article 16 of the Convention on the Rights of the Child and Article 22 CRPD) protects the right to freedom from unlawful or arbitrary interference with privacy. Certain provisions in the Standard could be considered to limit the right to privacy. However, the right to privacy is not an absolute right and a limitation is not incompatible with the right itself.

Part 6 of the Standard imposes certain record keeping requirements on CSPs relating to their dealings with customers about financial hardship matters. These records include personal information, including details of customers and communications between the CSP and customers, which are required to be kept for at least 2 years, and be made available to the ACMA by written request.

The requirement for retention for at least 2 years is consistent with the requirement for retention of records applied in other record-keeping rules made by the ACMA under subsection 529(1) of the Act and reflects the reasonable and practical needs of the ACMA in performing its functions of monitoring and assessing compliance of providers with their obligations under the Standard. The ACMA’s compliance and enforcement functions in relation to the Standard are integral to ensuring that telecommunications service providers are compliant with their obligations and that the objectives of the Standard and the Direction are met.

In the ACMA’s view, the type of personal information required to be collected and kept by CSPs under the Standard is limited to that information which is necessary to enable the ACMA to investigate a complaint that a CSP has breached the Standard.

In addition, the Standard only permits the collection of personal information requested under subsection 16(3) in limited circumstances and if it is strictly necessary to conduct the assessment of eligibility for financial hardship assistance (see subsection 16(6)). Under section 30, records of information collected under subsection 16(3) must be destroyed or disposed of in a secure manner after the assessment has been completed.

The Privacy Act 1988 (Privacy Act) applies to the ACMA and the ACMA’s administration of the Standard. As noted above, customer records may need to be accessed for monitoring and enforcement activities. The ACMA is subject in all relevant respects to the Privacy Act and the Australian Privacy Principles, and has a formal Privacy Management Plan, and takes all the usual precautions and other measures which a Commonwealth Government agency is required to take in order to safeguard personal information that comes into its custody and care.

Most CSPs are also subject to the Privacy Act regarding the personal information they handle in accordance with the Standard. In any event, it is expected that any personal information collected under the Standard would usually be provided with the consent of the consumer wishing to make an application for financial hardship assistance.

The Standard includes provisions in Part 6 which require CSPs to ensure that the information kept under that Part is only disclosed in specified circumstances, protected, stored securely and disposed of when no longer needed under the Standard or any other applicable laws. Further, section 31 of the Standard imposes requirements on CSPs that are not covered by the Privacy Act, to ensure that relevant personal information is keep confidential and not disclosed to third parties except: as required to manage a complaint with the TIO or the ACMA; with the express consent of the consumer; or where disclosure is otherwise required or authorised by law.

These safeguards, together with the other restrictions on the handling of personal information mentioned above, indicate that the Standard is reasonable, necessary and proportionate.

Right to freedom of expression

The ACMA considers that the Standard engages the right to freedom of expression, in so far as that right includes the right of customers to receive information relating to financial hardship matters.

Parts 1 and 3 of the Standard impose requirements on CSPs to provide information and advice to financial hardship customers. For example: Part 1 requires CSPs to establish a payment assistance policy with a number of minimum content requirements, including how the customer can contact financial counselling services and the TIO or make a complaint to the CSP, and to make those payment policies available to consumers. Part 3 requires CSPs to advise about how they assess eligibility for financial hardship including criteria, timeframes, options, communication of outcomes and review, and options for assistance.

The obligations in Parts 1 and 3 of the Standard are designed to help financial hardship customers to make informed decisions about options for assistance offered by a provider before consenting to an arrangement for financial hardship assistance.

Part 4 of the Standard requires a CSP to provide certain information to a financial hardship customer before it takes credit management action, including the nature of and reasons for taking that action, contact details for the TIO and financial counselling services.

The ACMA considers that Part 4 affords protections to financial hardship customers and is directed at promoting the rights of consumers to receive information about the nature of credit management action taken by a CSP, their rights and options for financial hardship assistance, and support and dispute resolution services. Accordingly, the ACMA considers that the Standard does not cause any limitation or interference with the right to freedom of expression.

Rights for persons with disabilities

A number of provisions in the Standard positively engage and support the rights of people with disabilities (among others) to receive information on an equal basis with others and through all forms of communication of their choice about telecommunication products and access to financial hardship consistent with Articles 9 and 21 of the CRPD.

For example, section 8 imposes obligations on CSPs to make their payment assistance policy available in a format that is accessible to consumers with disabilities (among others). CSPs are also required in section 10 to ensure that their processes are accessible to consumers with disabilities. Further, section 16 requires CSPs to assist customers with disabilities to make an application for financial hardship assistance.

Conclusion

The Standard is compatible with human rights because, to the extent that the right to privacy is limited by the Standard, in light of the clear protections and safeguards set out in the Standard, the limitation is reasonable, necessary and proportionate to meet the objectives of the Standard, and is no more restrictive than is required to achieve those objectives.

Further, the Standard is compatible with right to freedom of expression and rights for persons with disabilities. These rights are positively engaged by providing consumer protections and safeguards by requiring CSPS to make information available about a their financial hardship policies and processes to all consumers on an equal basis.

Attachment C

Impact Analysis

Financial hardship in the telco sector – enhancing consumer protectionsImpact analysis

JANUARY 2024

Canberra

Level 3
40 Cameron Avenue
Belconnen ACT

PO Box 78
Belconnen ACT 2616

T +61 2 6219 5555
F +61 2 6219 5353

Melbourne

Level 32
Melbourne Central Tower
360 Elizabeth Street
Melbourne VIC

PO Box 13112
Law Courts
Melbourne VIC 8010

T +61 3 9963 6800
F +61 3 9963 6899

Sydney

Level 5
The Bay Centre
65 Pirrama Road
Pyrmont NSW

PO Box Q500
Queen Victoria Building
NSW 1230

T +61 2 9334 7700 or 1800 226 667
F +61 2 9334 7799

Copyright notice

https://creativecommons.org/licenses/by/4.0/

With the exception of coats of arms, logos, emblems, images, other third-party material or devices protected by a trademark, this content is made available under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) licence.

All other rights are reserved.

The Australian Communications and Media Authority has undertaken reasonable enquiries to identify material owned by third parties and secure permission for its reproduction. Permission may need to be obtained from third parties to re-use their material.

We request attribution as © Commonwealth of Australia (Australian Communications and Media Authority) 2024.

Introduction

Regulatory setting

Current protections for financial hardship

Regulatory framework

Reporting and compliance

What is the policy problem?

Changing environment

Financial hardship

Insufficient financial hardship protections

Addressing the gaps

Why is government action needed?

What policy options have been considered?

Option 1 – Status quo

Option 2 – Direct regulation

Implementing the Direction

Option 2A – Outcomes-based (discretionary)

Option 2B – Outcomes-based (enforceable)

What is the likely net benefit of each option?

Overview of options

Option 1 – Status quo

Benefits

Costs

Current disconnections that could have benefited from financial hardship arrangements

Current complaints due to financial hardship issues

Current cost of compliance, complaints and reconnections

Option 2A – Outcomes-based (discretionary)

Benefits

Costs

Option 2B – Outcomes-based (enforceable)

Benefits

Costs

Aggregation of costs and sensitivity analysis

Sensitivity analysis

Regulatory burden measurement

Who was consulted and what did they say?

Consultation

Consultation on draft Standard

Summary of stakeholder feedback

What is the best option from those considered and how will it be implemented?

Status quo

Implementation

Engagement to support implementation

Education campaign

How will you evaluate your chosen option against the success metrics?

Appendix A: Costs and benefits inputs and data

Summary list of identified costs and benefits

Summary of costs and benefits for cost model

CSP costs

Introduction

The Australian Government is committed to ensuring telecommunications customers facing financial hardship receive the necessary information and support, recognising the essential nature of telecommunications services in today's society. Access to reliable and affordable phone and internet services is crucial for work, education, health, entertainment, social connection, and government services.

There is evidence that the current safeguards for consumers facing financial difficulty in the Telecommunications Consumer Protection Code C628:2019 (the TCP Code) are not providing sufficient protections. The ACMA’s Financial hardship in the telco sector: Keeping the customer connected report uncovered significant rates of financial hardship among telecommunications consumers. However, only a small proportion of affected customers receive formal hardship support.

As at 30 June 2022, industry data from major carriage services providers (CSPs) reported 4,388 residential financial hardship customers[1], in contrast to an estimated 2.4 million Australian adults facing financial difficulty or concerned about their telco bill in the preceding 12 months.[2] Further, industry data during FY2022 indicated that 237,166 residential customers had their services disconnected due to non-payment of their bills.[3] Customers on a formal financial hardship program are afforded protection from credit management action.

Furthermore, the Financial Hardship report highlighted that existing financial hardship support arrangements, when accessed, were neither flexible nor tailored enough to meet individual consumer circumstances. It also highlighted the need for CSPs to do more to proactively engage and assist customers in need.

The ACMA’s findings align with concerns raised in the Telecommunications Industry Ombudsman (TIO) report A time for change – Three years of systemic investigations in review[4] and submissions to the current TCP Code review.

This information, together with feedback from consumer groups and advocates over an extended period, show that the current financial hardship rules in the TCP Code are not working effectively to support consumers experiencing vulnerability.

In response, the Minister for Communications directed[5] the ACMA on 6 September 2023 to make an industry standard (the Standard) requiring CSPs dealing with residential, small business and not-for profit customers to provide appropriate information and support to telecommunications customers experiencing financial hardship .

The minister’s direction acknowledges the challenges consumers face in accessing financial support when needed. The Standard aims to enhance protections for these consumers, ensuring that all Australians can stay connected to increasingly essential telecommunications services and receive necessary assistance.

Regulatory setting

The ACMA is an independent Commonwealth statutory authority that regulates communications and media services in Australia to maximise the economic and social benefits for the nation. This includes regulating telecommunications providers.

The regulatory framework encompasses 4 principal Acts – the Radiocommunications Act 1992, the Telecommunications (Consumer Protection and Service Standards) Act 1999, the Broadcasting Services Act 1992 and the Telecommunications Act 1997 (the Telco Act). Additionally, the ACMA has responsibilities under the Interactive Gambling Act 2001, the Spam Act 2003 and the Do Not Call Register Act 2006.

Current protections for financial hardship

Within this regulatory framework, CSPs are required to comply with a range of telco-specific rules in the TCP Code that provides consumer safeguards in the areas of sales, service and contracts, billing, credit and debt management and changing suppliers.

Financial hardship rules set out in Chapter 7 of the TCP Code require CSPs to provide access to financial hardship assistance. This includes the provision of easily accessible financial hardship policies and options enabling consumers to stay connected while meeting financial obligations.

There are other general obligations in the TCP Code applicable to financial hardship, including credit management obligations relating to customers experiencing financial hardship in Chapter 6.

The TCP Code was developed by Communications Alliance, the peak industry body for the telecommunications sector, for registration by the ACMA. The TCP Code is under review at the time of this assessment (and is due for completion in mid-to-late 2024).

Regulatory framework

Under Part 6 of the Telco Act, the options available to the ACMA to make obligations enforceable are either via a registered industry code or an industry standard.[6]

The ACMA may call for an industry code to be made providing certain threshold conditions are met or register an industry code if submitted by a body representing the industry (if certain matters are satisfied). The ACMA may determine a standard where a code has been called for and not provided, where a code fails, or, where the ACMA is directed to do so by the minister administering the Telco Act.

Obligations contained in an industry code provide the ACMA with initial enforcement powers to give formal warnings or directions to comply with the code. Civil penalties can then be pursued through the Federal Court or an infringement notice issued if a direction to comply is then breached (under Part 31 of the Telco Act). If an industry code proves deficient or is not developed by industry, then an industry standard can be considered (section 125). If directed by the minister, the ACMA must make a standard (subsection 125AA (4) of the Telco Act).

The ACMA and the minister also have powers to make a service provider determination under section 99 and section 99(1A) of the Telco Act respectively that applies to certain service providers in relation to the interests of customers.

If a standard or service provider determination is contravened, the ACMA may:

>      issue a formal warning

>      give a remedial direction

>      accept an enforceable undertaking

>      give an infringement notice

>      seek an injunction in the Federal Court to compel the person to act or refrain from acting in a particular way

>      seek civil penalties via Federal Court proceedings (up to $50,000 for a person and $250,000 for a body corporate per contravention).

Reporting and compliance

The ACMA enforces compliance with telecommunications regulations. Protecting vulnerable customers, including those experiencing financial hardship is one of the ACMA’s 2023-24 compliance priorities[7]. It was also an ACMA compliance priority in 2022–23. Under this priority, the ACMA focuses on protecting telecommunications customers experiencing financial hardship and making sure providers of telecommunications services comply with their obligations, especially those relating to the disconnection of services. It has involved the following activities:

>      research to better understand the consumer experience

>      industry information to better understand CSP practices when dealing with customers experiencing financial hardship

>      an audit of compliance with rules related to financial hardship and disconnection in the TCP Code

>      investigating and taking action against 8 CSPs[8] after they failed to provide adequate safeguards that would help customers avoid service restrictions, suspensions or disconnections

>      an education campaign aiming to raise consumer awareness of financial hardship programs and protections[9].

Four years ago, the ACMA initiated annual State of Play reports[10], highlighting the importance of financial hardship in the telecommunications sector. Informed by research, compliance activities and industry reporting, the Financial Hardship report built on this previous work to determine whether safeguards are providing appropriate support to consumers in vulnerable circumstances.

The Financial Hardship report complements the ACMA’s Consumer vulnerability: expectations for the telecommunications industry (Statement of Expectations), released in May 2022, which sets out detailed expectations for CSPs dealing with consumers experiencing vulnerability, covering all aspects of customer interaction, including financial hardship support.

The ACMA also released a related position paper for the telecommunications sector in July 2023, What consumers want – Consumer expectations for telecommunications safeguards (What Consumers Want paper), evaluating the effectiveness of the TCP Code in providing consumer safeguards. The paper identified areas, including financial difficulty, where substantial improvements are needed to meet consumer expectations.

The ACMA convenes the Consumer Consultative Forum (CCF) under section 59 of the Australian Communications and Media Authority Act 2005. It is a key advisory group that brings together consumer organisations, the telecommunications industry and government to examine issues affecting telecommunications users. The views and feedback from representatives have informed the ACMA publications noted above, and the development of the Standard.

Other key agencies with relevant regulatory responsibilities includes the Australian Competition and Consumer Commission (the ACCC) as the Commonwealth competition and consumer regulator and the TIO.

The TIO provides a free and independent resolution service for small business and individual consumers who have been unable to resolve their complaint with a phone or internet service provider. The TIO also collects and reviews complaint data, offering insights into industry trends and systemic issues.

The ACCC is responsible for monitoring and enforcing compliance with the Australian Consumer Law (ACL). Businesses operating in the telecommunications industry are subject to the economy-wide provisions set out in the ACL. The ACCC has taken enforcement action against a number of telecommunications suppliers in response to misleading and deceptive conduct, as well as in response to unconscionable conduct.

Consumer groups and advocates actively participate in representing the interests of consumers and highlighting potential deficiencies in the current regulatory framework. One such example is research by the Australian Communications Consumer Action Network (ACCAN) and the Public Interest Advocacy Centre (PIAC).[11]

What is the policy problem?

Changing environment

In consideration of the Government’s commitment to ensuring Australians struggling with the cost-of-living have access to appropriate safeguards, the Minister for Communications decided to elevate financial hardship obligations to direct regulation so that appropriate support is provided to telecommunications customers to ensure they stay connected.[12] On 6 September 2023, the minister directed[13] the ACMA to make an industry standard which addresses requirements set out in the Telecommunications (Financial Hardship Industry Standard) Direction 2023.

Telecommunications services are increasingly essential for work, education, health, and access to government services. They have evolved significantly since the introduction of the Telco Act in 1997. Their use has also accelerated significantly since the TCP Code was registered in 2019, supporting more Australians than ever to work from home and enjoy an enormous array of online entertainment services.

The low entry barrier to the market has fostered a large and diverse sector for the supply of telecommunications services. As of 30 June 2023, there were 1,686 TIO members[14], noting carriers and eligible CSPs must join the TIO Scheme. Based on data submitted to the ACMA at 30 June 2023 under the Telecommunications (Consumer Complaints) Record-Keeping Rules 2018, 33 CSPs had at least 30,000 services in operation. Of these 33 CSPs:

>        9 CSPs make up over 90% of the market share, all of which have at least 700,000 services in operation.

>        14 providers make up over 95% of the market share, all of which have at least 250,000 services in operation.

Consumers are also currently facing a challenging economic environment as the cost-of-living has risen sharply over the past 18 months – inflation has increased, interest rates have risen and wages have not kept pace.[15]

Current cost-of-living pressures have further highlighted the need to ensure appropriate support is available to consumers who are experiencing financial stress and hardship. While telecommunications may not be a main contributor to the increased cost of living, it is crucial that consumers experiencing hardship stay connected these services.

Financial hardship

Financial pressures can happen to anyone, at any time and for many reasons, including loss of income, illness, family or domestic violence, natural disasters, or more recently the COVID-19 pandemic and increased cost-of-living pressures. Some groups within the community are also more likely to be in financial hardship, including those who are victims of domestic violence, those living with a disability (either themselves or someone within their household), low-income households, those with low levels of financial literacy, or those that may have inadvertently signed up to a service or product without understanding the terms and conditions.

Financial hardship in the telecommunications sector can range from temporary stress to a longer-term issue, and the extent of the hardship varies. It may be linked with financial hardship in other aspects of the consumer’s finances or just be related to one or more telco services.

Insufficient financial hardship protections

Despite the essential nature of telecommunications, evidence indicates that current safeguards do not adequately protect consumers facing financial difficulties. The ACMA’s Financial Hardship report and associated research[16] found:

>        The rates of telco financial hardship are significant, yet only a small proportion of customers receive formal hardship support. 25% of Australians had experienced payment difficulty or concerns in the previous 12 months for at least one of their essential services bills (telco, energy, water) and 48% of those had difficulty with their telco bills. This represents just under 2.4 million Australian adults in financial difficulty or concern for their telco bill in that period. In contrast, industry data from the main telcos reported only 4,388 residential financial hardship customers as at 30 June 2022. This represents 0.03% of all residential customers.[17]

>        Industry requirements to inform customers about hardship arrangements often go unnoticed, with only 57% of the general adult population and 64% of those who experienced financial hardship aware they could contact their telco for help managing the payment of bills due to financial difficulties. Telcos are required to have financial hardship policies that are easy to find and access. While the 11 major telcos we sought information from confirmed that they publish financial hardship policies on their websites, extensive navigation on their websites to access financial hardship policies was required for 10 of these 11 CSPs.

>        During 2021–22, a total of 237,166 residential customers had their services disconnected due to non-payment. Of those, only 834 were reported by the main telcos as financial hardship customers. CSPs may also disconnect customers when they are not able to be contacted – during 2021–22, a total of 169,262 residential customers had their services disconnected due to being uncontactable. Of those, 1,293 were financial hardship customers.

>        Short disconnection timeframes offer little room for consumers to resolve issues before having their communications cut off. Given that telecommunications is increasingly an essential service, CSPs should contact customers well in advance of disconnection with messages that clearly state the consequences of disconnection and afford customers sufficient time between sending the disconnection notice and the actual disconnection to seek financial assistance or make alternative arrangements. Research participants noted the effect of disconnection were significant on many aspects of everyday life.

>        Telcos are not sufficiently proactive in engaging with consumers struggling to pay their bills, with human contact even less likely. Ten of the 11 providers we sought information from reported to us that they proactively identify customers who may be experiencing financial difficulty. However, consumers who had financial difficulties or concerns with their telco bills reported it was rare for telcos to initiate contact, especially human contact, in relation to potential financial hardship.

>        Financial hardship arrangements are often inflexible and not personally tailored to individual circumstances. Telco providers were also generally seen as being less well-equipped with fewer options available, and less flexible than other essential services, particularly electricity providers, when dealing with customers in financial hardship.

>        Inflexible payment option, with a focus on direct debit, compounds financial difficulties faced by consumers. There was a general view from research participants that direct debit was a convenient method of payment in perfect and predictable circumstances, but was more problematic at times of financial difficulty, adding to stress and incurring extra fees. Research participants also reported feeling frustrated that the telco did not provide any forewarning that they would be referred to a debt collection service and that debt collection made them feel intimidated or stressed.

These identified issues can have a profound impact on consumers facing financial hardship, including:

>        service disconnection which affects communications, opportunities and digital inclusion

>        increased stress and anxiety due to financial difficulties and potential loss of essential services

>        negative credit consequences impacting access to other essential services and financial products

>        social exclusion limiting participation in online activities

>        vulnerable groups such as low-income households, the elderly, those facing health challenges and victims of domestic violence may be more adversely impacted.

Conversely, providing appropriate financial support can yield far-reaching benefits for consumers in need. Recognising the essential nature of telecommunications services, it enables them to engage in a broad range of activities, including work and education. Moreover, it facilitates access to various services such as health and government support.

On a fundamental level, access to telecommunications services serves as the gateway to participation in the digital realm. Digital exclusion arises when individuals lack the means to connect to these services and acquire the necessary devices for access. This exclusion, manifesting in various forms, directly correlates with adverse outcomes, such as compromised health, diminished life expectancy, increased loneliness, social isolation and limited access to crucial resources like employment and education.[18] Digital exclusion is connected with an inability to participate fully in economic, social and civic life, presenting and compounding barriers to education, work and vital services.[19]

In its submission to the ACMA’s consultation the Statement of Expectations, Relationships Australia details the importance of digital inclusion being a critical enabler of social inclusion and connection and preventative against loneliness and its adverse effects on physical and mental health.[20]

Addressing the gaps

There are gaps in the financial hardship rules in the TCP Code in the way they operate and provide protections to consumers in need. These gaps and supporting evidence are detailed in the What Consumers Want paper and the Financial Hardship report and include:

>        Narrow definition of ‘financial hardship’. The ACMA is aware that telcos offer some additional forms of ‘financial assistance’, but these sit outside of the TCP Code definition.

>        Financial assistance, including payment plans and extensions to pay, are frequently outside of formal financial hardship programs, negating TCP Code protections such as preventing credit management action against customer in financial hardship.

>        Timeframes for CSPs to notify customers of impending disconnection, suspension or restriction of services are too short and, in some cases, are not being complied with.

>        Low levels of consumer awareness about telecommunications financial assistance.

>        A lack of consistency across industry in assessing eligibility for financial hardship assistance.

>        A lack of flexibility in some financial hardship arrangements that does not account for a consumer’s individual circumstances.

>        Difficulties with enforcing some of the existing financial hardship provisions in the TCP Code due to poor drafting.

>        The TCP Code does not prescribe what factors should be considered in assessing a customer’s eligibility for financial hardship assistance or what staff training would be appropriate in these circumstances.

>        Limited enforcement options under the TCP Code – a formal warning or a direction to comply. More serious action can only be taken after a CSP breaches a direction to comply (meaning a second or repeated contravention).

The ACMA’s findings are further supported by:

>        the TIO’s June 2023 report A time for change – Three years of systemic investigations in review [21], which made recommendations where the telecommunications regulatory framework and industry could evolve to provide better protection for consumers who are vulnerable, including:

>      telcos need to do more to reduce barriers for consumers seeking help

>      improved regulation would help reduce unexpected debt and financial hardship

>      direct regulation should play a primary role in protecting consumers that are vulnerable.

>        the TIO’s April 2023 report Thematic Review: Our financial hardship complaints 2021 - 223[22], which provides an overview of complaints received about financial hardship between 1 April 2021 and 31 March 2023 and provided case studies illustrating some of the issues customers in financial hardship experienced. This included a situation where a customer who became seriously ill and was not able to work was not offered a reasonable payment arrangement, and another where a pensioner customer was unable to reach her telco to ask for financial assistance.

>        recent ACMA action against 8 CSPs for failure to provide adequate notice for service restrictions, suspensions or disconnections and failure to provide information about financial hardship policies[23] and action against a CSP for breaching the requirement to suspend credit management activity for 70 financial hardship customers between August 2019 and April 2022.[24]

>        reports and research by other organisations including research by the ACCAN and the PIAC[25] into how consumers experience their billing arrangements, which found that some of the payment options offered by CSPs are not suitable for people in vulnerable circumstances.

>        submissions to the current review of the TCP Code[26] by the TIO[27], the ACCC[28] and ACCAN.[29]

Feedback from current consumer representatives[30] of the ACMA’s CCF has also emphasised the need for more robust financial hardship protections beyond those afforded by the TCP Code, and accords with feedback received during development of the ACMA’s Statement of Expectations.

This, together with feedback from consumer groups and advocates over an extended period, emphasises the inadequacy of current financial hardship rules.[31]

In examining the regulatory landscape surrounding financial hardship within the telecommunications sector, the ACMA investigated measures adopted by other countries and sectors to address similar challenges.

This involved a comprehensive comparative study conducted in early 2023, focusing on telecommunications consumer protection frameworks in Canada, the United Kingdom (UK) and New Zealand (NZ). The study examined the regulatory measures in place to help consumers facing financial stress and assist them in staying connected. Building on previous research[32], the ACMA concentrated on practical measures in place in other sectors and jurisdictions.

The comparative study highlighted that the UK's regulatory framework, overseen by the UK regulator Ofcom, surpasses that of the TCP Code. The UK's measures, enshrined in law and regulation rather than an industry code, include clear guidelines on financial assistance. Notably, the UK framework boasts a streamlined process for assessing financial hardship customers, with the regulator expecting individuals experiencing payment difficulties to be treated as vulnerable customers, triggering a range of additional supportive measures. The TCP Code is also surpassed by the NZ and Canada consumer protections for managing customers facing disconnection due to non-payment and the associated timeframes. Both countries require longer timeframes before disconnection can occur and NZ steps out a process diagram within their telco disconnection code.[33] Comparison with other sectors offering essential services, such as electricity and gas, further highlights the need for a more clearly enforceable framework in the telecommunications sector. In the sale and supply of electricity and gas, the National Energy Customer Framework (NECF) establishes a robust regulatory structure, including the National Energy Retail Law, Rules, and Regulations. The Australian Energy Regulator (AER) enforces compliance, backed by strong regulatory penalties applicable from the first breach.

Considering the identified gaps in existing rules, cost-of-living pressures and the essential nature of telecommunications services, the minister directed the ACMA on 6 September 2023 to make an industry standard requiring CSPs to provide appropriate information and support to telecommunications customers experiencing financial hardship.

The aim is to strengthen safeguards for consumers in vulnerable circumstances, including Australians struggling with the increased cost of living, so they stay connected and receive the necessary assistance. Direct regulation will also facilitate more effective enforcement of rules governing CSPs assistance to consumers experiencing financial hardship.

Why is government action needed?

Research and evidence confirm there is a problem with customers experiencing financial hardship being provided with adequate and appropriate support and staying connected to a service which is essential to everyday life, including for social and economic participation.

It is essential to have contemporary telecommunications industry obligations and consumer protections that are appropriate for the current environment. These regulations should enable and support all Australians, regardless of their individual circumstances, to access and use telecommunications services. The type of regulation and the tools to enforce compliance, if necessary, should also match the importance that telecommunications services play in Australians’ lives.

Industry has been made aware for some time that protecting vulnerable consumers, including those experiencing financial hardship, is a priority and that the TCP Code is not operating to adequately protect consumers. ACMA research and reports over the past 4 years, and from a range of other key stakeholders, including submissions to the TCP Code review, confirm financial hardship is a significant problem and indicates that stronger measures are required to meet reasonable consumer expectations.

The ACMA has actively pursued sector improvements for over a year, setting out a Statement of Expectations in May 2022 and the What Consumers Want position paper in July 2023. The TIO, ACCC and consumer groups such as ACCAN have also called for action for some time.

The co-regulatory framework offers industry the opportunity to address consumer concerns but it has not adequately done so. The current review of the TCP Code, due for completion in mid to late 2024, has again prompted calls for direct regulation from non-industry stakeholders. This view has been expressed consistently over some time and has been reiterated in several submissions to the Communications Alliance discussion paper on the review of the TCP Code,[34] including from the TIO[35], the ACCC[36] and ACCAN[37].

ACCAN’s engagement with consumers, consumer representatives, peak bodies, and consumer groups has elicited a common view that the TCP Code provides inadequate consumer protections. Further, that direct regulation drafted by government is necessary.

The ACCC flagged the limitations of the regulatory framework that hinder the ACMA’s ability to enforce or improve the TCP Code, and that it is not confident the code review process will result in beneficial outcomes for consumers. It supports exploring other regulatory solutions, including setting out telecommunications consumer protections in a standard.

The TIO’s submission to the TCP Code review echoed its submission to Part C of the Consumer Safeguards Review[38], again calling for essential consumer protections to be included in directly enforceable rules made by government and regulators rather than made by an industry representative body to create better outcomes for both consumers and the industry.

Direct regulation is considered necessary for several reasons, including that it:

>        addresses the serious nature of the harms involved by supporting direct regulatory intervention and serving specific and general deterrence through strong, immediately available enforcement action

>        enables the ACMA to directly design robust and clear enforceable obligations

>        allows adequate and effective consumer protections to be put in place more quickly, considering industry’s significant time to address the issue

>        provides the strongest incentive to achieve the best outcome for the Australian community

>        recognises the essential nature of phone and internet services for Australian consumers.

The minister’s decision to direct the ACMA to make an industry standard on financial hardship was considered necessary to address the identified policy problems and to ensure appropriate support is available through directly enforceable rules made as soon as possible. If government did not intervene and deferred to the TCP Code review process, new rules would not be in place until later in 2024 at the earliest.

The objective of government action is to strengthen safeguards for consumers in vulnerable circumstances and Australians struggling with the increased cost of living, so they are able to receive the assistance they need to stay connected.

The objectives of the Direction, as set out in clause 7, are:

>        Promotion of financial hardship policies – ensure CSPs promote their financial hardship policies and information about assistance for customers who are, or may be, experiencing financial hardship, and that the policies and information can be easily found and accessed by customers and potential customers

>        Early identification and assistance - require CSPs to identify customers who may be experiencing financial hardship early and provide assistance to those customers

>        Appropriate eligibility criteria - ensure CSPs’ eligibility criteria and assessment processes related to financial hardship assistance have appropriate regard to the essential nature of carriage services

>        Tailored assistance – ensure customers who are experiencing financial hardship receive adequate, appropriate and tailored assistance to manage their payment obligations and associated debts

>        Prioritising connection - ensure any credit management action taken by CSPs in relation to customers who are experiencing financial hardship prioritises keeping customers connected to appropriate services and only use disconnection as a measure of last resort.

Implementation of an industry standard will also facilitate more effective enforcement of rules governing CSPs assistance to consumers experiencing financial hardship.

Potential barriers and risks associated with government intervention could hinder the successful achievement of stated objectives. One challenge lies in potential industry opposition to the proposed regulatory changes. The telecommunications sector, as a dynamic and competitive industry, may express concern about an additional regulatory burden and its impact on operational flexibility. The complexity involved in designing and implementing effective regulations within a rapidly evolving technological landscape poses a risk.

To address these challenges, the ACMA has consulted widely in developing this Standard. Consultation and engagement with industry stakeholders has been integral in understanding and addressing concerns, fostering a collaborative approach to these regulatory changes. Industry was well informed and contributed constructively. The ACMA's extensive research and experience also served as valuable resources in navigating the complexities of regulatory design and implementation.

By proactively identifying potential barriers and implementing targeted strategies to mitigate risks, the government aims to enhance the likelihood of successful intervention in addressing financial hardship in the telecommunications sector.

Success will be measured by the following:

>        Increased rates of financial hardship arrangements across the industry (compared to the number of customers experiencing hardship). Industry data from the main telcos (representing more than 80% of the market) reported 4,388 residential financial hardship customers as of 30 June 2022, representing only 0.03% of all residential customers.

>        Increased consumer awareness that financial hardship support is available from CSPs. Our May 2023 consumer research found that only 57% of the general Australian adult population, and 64% of those who experienced a financial hardship situation in the past 12 months reported they were aware they could contact their telco provider for financial hardship assistance.

>        Clear access to information about available financial hardship support from providers. As of June 2022, all but one of the main telcos required extensive navigation on their websites to access financial hardship policies as of 30 June 2022.

>        Decrease in the number of customers disconnected while in financial hardship. During 2021–22, a total of 237,166 residential customers had their services disconnected due to non-payment. Of those, only 834 were reported by the main telcos as financial hardship customers.

>        Reduced complaints received by the TIO from consumers experiencing financial hardship and their provider did not give appropriate help. Between 1 April 2021 and 31 March 2023, the TIO received over 3,000 such complaints.

>        Feedback from consumer groups and community organisations that consumers have been able to access appropriate financial hardship assistance.

What policy options have been considered?

Option 1 – Status quo

The government retains the status quo, refraining from introducing new regulation, relying on the current TCP Code review by Communications Alliance to address financial hardship issues.

The ACMA’s What Consumers Want paper identifies deficiencies in the TCP Code needing urgent improvement, including financial hardship. The ACMA has sought a definitive indication from the telecommunications industry by the end of 2023 on the detailed amendments it will make to the TCP Code to address the issues raised. If unsatisfied with industry response, the ACMA has the authority to enact direct regulation on relevant issues.[39]

Compliance and enforcement powers for code breaches are limited and Australians experiencing financial hardship will continue to experience significant harms until the identified gaps in the TCP Code are addressed and uplifted to direct regulation where strong enforcement is available. Industry has had a material opportunity to address the issues prior to this latest review and has not done so.

Non-regulatory measures, including a consumer education campaign launched in March 2023[40], has been undertaken to raise consumer awareness of the financial hardship assistance available when they are experiencing difficulties paying their telco bills. The campaign, aimed at encouraging consumers to engage with their telco when they experience financial hardship, comprised:

>        consumer-focused materials with relevant information, advice and links – such as website content, graphics and videos

>        use of targeted communication channels to effectively reach consumer audiences – such as social media, e-newsletters, consumer advocates and paid advertising.

The ACMA also enhanced the information for industry on its website to explicitly set out key TCP Code financial hardship rules[41] to further support industry understanding of the current requirements in an effort to minimise the need for regulatory intervention.

However, these efforts fall short of addressing the problem. To date, industry has not shown any inclination to voluntarily improve their financial hardship policies to address consumer concerns.

It was open to the minister to take no action and allow financial hardship issues to be addressed through the current TCP Code review or by later direct regulation imposed by the ACMA. However, the minister directed the ACMA to make a standard in response to the serious and immediate issues being faced by vulnerable consumers in accessing financial support when they need it, as demonstrated in the findings from the ACMA’s Financial Hardship report.

Option 2 – Direct regulation

The minister directed the ACMA to make an industry standard on financial hardship under section 125AA of the Telco Act to address the identified gaps in the existing TCP Code on 6 September 2023.

The ACMA must determine an industry standard if directed by the minister. Retaining the status quo is therefore not a live option.

Under the Telco Act, it is not possible for the ACMA to take direct action for initial breaches of an industry code no matter how significant. If a breach of a code is identified, the ACMA can direct a CSP to comply with the code or issue a formal warning. The ACMA can only take broader enforcement action (for example, seeking penalties) if a CSP continues to contravene – that is, it is a 2-step enforcement process.

The Minister’s decision considered substantial evidence pointing to the problem, as revealed in the ACMA's Financial Hardship report. Despite 2.4 million Australians facing payment difficulties, only 4,388 benefited from formal financial hardship programs by June 2022. This data underscores the urgency for intervention.

The Direction was developed in consultation with stakeholders, with constructive feedback received and considered.

Implementing the Direction

The Direction provides the legal authority to make a new industry standard under section 125AA of the Telco Act.

An industry standard applies to participants in a particular section of the telecommunications industry; and deals with one or more matters relating to the telecommunications activities of those participants. The Direction specifies that the Standard is to apply to CSPs in their interactions with residential, small business and not-for-profit customers.

The Standard must require CSPs to support customers facing or likely to face financial hardship through early identification and appropriate assistance. The Standard must also address the promotion and dissemination of information to customers about financial hardship, emphasising the importance of keeping customers connected to appropriate services for their needs. The explanatory statement[42] to the Direction underscores the need to maintain access to devices that enable connection to appropriate services.

Outlined within the Direction are objectives the Standard must give effect to (clause 7(1)) and a range of matters that the Standard may include (clause 7(2)). To fulfil these objectives, rules addressing the matters in clause 7(2) are necessary. While the Direction's content in clause 7(2) is detailed, indicating an intention for rules, the ACMA retains some flexibility in drafting rules on various aspects, such as

>        establishing written financial hardship policies, including processes for assisting customers who are or may be experiencing financial hardship and other requirements relating to financial hardship policies considered appropriate by the ACMA

>        promoting financial hardship policies and providing information and advice to customers and potential customers about these policies and assistance

>        early identification of customers who may be experiencing financial hardship and ongoing evaluation of their circumstances

>        providing appropriate customer service for customers who are or may be experiencing financial hardship

>        defining processes for assessment and provision of financial hardship assistance to customers

>        ensuring staff training and conduct in identifying and supporting customers who are or may be experiencing financial hardship

>        credit management action undertaken by or on behalf of CSPs in relation to customers experiencing financial hardship, including requirements for appropriate protections in service restriction, suspension or disconnection.

While being appropriately limited by the stated objectives in clause 7(1), the Direction gives the ACMA broad discretion to include additional matters deemed necessary to meet these objectives. Discretionary matters encompass transitional arrangements and record-keeping requirements and defining terms as appropriate or necessary.

Supported by evidence from the Financial Hardship report and What Consumers Want paper, there is a compelling case for addressing gaps and deficiencies in the TCP Code rules related to how CSPs engage with customers experiencing financial difficulties. These issues include a narrow definition of 'financial hardship,' inadequate financial hardship programs, short notification timeframes for service actions, low consumer awareness, inconsistent eligibility assessments, inflexible arrangements, and difficulties in enforcing existing provisions.

The ACMA has adopted an evidence-based approach to draft the Standard, considering enhancements to existing TCP Code provisions and introducing new elements to address identified gaps or deficiencies.

The Standard is designed to improve the experience of telecommunications consumers facing bill payment difficulties, recognising the essential nature of telecommunications services and making it clear that disconnection is a measure of last resort.

Outcomes-based regulation is highly favoured by the ACMA, recognising the flexibility it provides for implementation across a diverse sector. There are various ways in which outcomes-based rules can be applied, as set out below.

Option 2A – Outcomes-based (discretionary)

As previously mentioned, while the Direction sets the rules for the Standard with limited discretion, there is room for flexibility in constructing the Standard, allowing providers discretion in how they meet obligations within an established framework. The key distinction between the status quo and Option 2A lies in the mechanism of achieving outcomes-based regulation. Option 2A involves direct regulation, providing a more targeted and expedited response to financial issues with greater incentives for providers to comply. Industry prefers outcomes-based rules. While Option 1 would also likely consider outcomes-based regulation through industry-led initiatives, Option 2A takes a more assertive stance by providing a specific framework under the Direction, offering associated benefits of direct regulation, such as a standardised approach and more immediate action in addressing identified gaps. While the status quo relies on the existing TCP Code review, Option 2A provides room for flexibility within the framework set by the Direction.

Under Option 2A, providers have the discretion to design and implement strategies for early identification and assistance that align with their operational models and customer base. This approach has the potential to encourage diverse solutions tailored to various customer needs, fostering adaptability in addressing financial hardship challenges.

However, the absence of more specific guidelines may introduce ambiguity, posing challenges for consistent enforcement across the industry and potentially resulting in varying levels of consumer protection. There is a significant risk that without clearly enforceable rules in key areas of concern that have informed the Direction, this approach may not adequately address the identified gaps in current protections and therefore fail to meet the objectives of the Direction.

Option 2B – Outcomes-based (enforceable)

Option 2B maintains an outcomes-based focus but adopts a more detailed and enforceable approach aligning with explicit requirements of the Direction in keys areas where enhanced protection is required. While still providing CSPs with a large amount of discretion, this option responds to the direction with structured and detailed regulatory obligation where a specific outcome is required due to evidence of current failures.

This approach empowers the ACMA to set clear obligations, establishing a standardised foundation for industry participants. The approach ensures explicit rules where necessary, reducing ambiguity and allowing for a consistent understanding of compliance requirements, and enforceability. This approach provides clarity for industry stakeholders and consumers, setting expectations for robust and standardised consumer protections, while still retaining an outcomes focus.

Mitigating challenges in enforcing compliance with the TCP Code, well-drafted clear and specific key rules offer a clearer understanding of obligations for industry and the regulator. They provide specific criteria for measuring compliance and enhance oversight, promoting consistency in industry practices. This approach establishes a level playing field, minimising the risk of inadequate support for customers facing financial hardship. This facilitates effective and timely consumer protections, meeting the primary objective of supporting customers in financial difficulty as required by the direction.

Consultation on the draft Standard will address potential implementation issues, ensuring rules do not inadvertently hinder innovation or adaptability for telcos.

What is the likely net benefit of each option?

Overview of options

The reform options that are set out in the previous section are summarised below with the key differences in the regulatory framework highlighted. The impact of these differences have been examined to gauge the relative benefits and costs of each option.

>        Status quo (Option 1) – the TCP Code continues without introduction of a new industry standard. The TCP Code could evolve in the future, but changes would not be expected to alleviate the current issues that apply to financial hardship. The status quo imposes costs on consumers, CSPs, the TIO[43] and the ACMA.

>        Direct Regulation Models (Options 2A and 2B) – both involve replacing the TCP Code with a standard. Option 2A employs outcomes-based regulation with discretionary application while Option 2B also adopts an outcomes-based approach but with clearly enforceable rules in key areas.

The focus of this section shifts towards the net benefits of Options 2A and 2B relative to the status quo (Option 1). While some costs of Option 1 are estimated here, the primary emphasis is on the net benefits of Options 2A and 2B.

By assessing the readily quantifiable costs and benefits of reform Options 2A and 2B over a ten-year period, Option 2B is expected to be net beneficial whereas Option 2A is not. Option 2B is preferable, as it delivers a net benefit even before the full range of benefits to consumers are considered. Table 1 summarises the expected costs for these options relative to the status quo.

The main drivers of the benefits for Option 2B is from avoided reconnection costs, and reduced enforcement costs relative to the status quo.

Table 1:       Summary of expected costs relative to the status quo[44]

Based on 10-year analysis using a 7% discount and providing the results in 2023 values.

Details of these costs and benefits for each option are presented in the next sections.

Option 1 – Status quo

As highlighted in preceding sections, the ACMA considers that the current TCP code lacks adequate support for telecommunications customers facing financial difficulties.

A comparison of data on the proportion of telecommunication customers on formal financial hardship arrangements with other utilities (such as energy companies) indicates that the telecommunication industry in Australia is behind other industries.[45]

Although the TCP code is being reviewed, the ACMA does not anticipate the review would effectively address the issues identified in this impact assessment.

Benefits

One of the key benefits of the status quo is that CSPs can avoid costs associated with implementing systems and processes to comply with new regulatory requirements.

The current regulatory model allows potential flexibility in addressing financial hardship issues through industry-led initiatives, although, this benefit is not considered significant given the lack of substantial industry action.

Costs

Various costs are associated with the status quo. These costs largely occur from disconnections of customers from telecommunications services due to non-payment. Further costs arise from the management of complaints by customers to CSPs, the TIO and the ACMA. These costs may have been averted if a different approach had been taken by the CSP to address financial hardship.

For example, a different approach may have alleviated the need for disconnection because it could have provided time for a consumer to arrange for a delayed payment of monies owed to the CSP or time for them to re-arrange their finances – allowing CSPs to recover monies owed. In some situations, the disconnection may still occur but at a later date.

Disconnections due to non-payment lead to several costs, including:

>        Consumers: In addition to incurring CSP fees to reconnect their service, disconnection can impact access to services, reduce opportunities, potentially affecting vulnerable groups, cause stress and anxiety, have negative credit consequences create social exclusion, and sacrifices in other areas of life. Further costs to consumers could arise from them making a complaint about their disconnection to their CSP, the TIO or ACMA.

>        CSPs: incur costs related to disconnecting and reconnecting consumers, along with dealing with customer complaints on financial hardship.

>        TIO: incur costs engaging with consumers on complaints relating to financial hardship, recovered through membership fees that are charged to the CSPs.

>        ACMA: incurs costs through engaging with consumers on complaints relating to financial hardship, educating consumers and industry, and compliance monitoring and enforcement of TCP Code rules.

These costs are considered higher than they would be under Options 2A and 2B, as the status quo does not robustly address financial hardship issues, providing a rationale for considering Option 2A and 2B.

Current disconnections that could have benefited from financial hardship arrangements

The primary driver of costs is the number of disconnections due to financial hardship issues. Based on industry data, the total number of consumers disconnected during 2021–22 because they could not pay their telecommunications bill, and could have benefited from financial hardship arrangements with their CSP, was estimated at 236,332.[46] This is in addition to the 4,388 customers who are currently on formal financial hardship arrangements.[47] 

This 236,332 estimate[48] appears to be a low estimate or underestimate of the total population who should be eligible for financial hardship provisions, noting this is significantly less than the estimated 2.4 million Australian adults facing financial difficulty or concerned about their telecommunications bill. We do note that some of these 236,332 customers may not have benefited from financial hardship status. On balance, 236,332 is considered a reasonable – but conservative – estimate of the population that should be eligible for formal hardship provisions for use in this impact assessment. 

Current complaints due to financial hardship issues

The total number of complaints due to financial hardship issues across CSPs, the TIO and the ACMA in 2022–23 is around 27,000 This represents approximately 2.5 per cent of all telco complaints. See Table 2.

Table 2:       Complaints relating to financial hardship issues

Source: Total complaints relating to financial hardship to TIO sourced from TIO 2022–23 Annual report, pages 79 and 86. The total number of complaints relating to financial hardship for CSPs is based on the total number of complaints as reported to the ACMA (by CSPs with more than 30,000 services in operation) multiplied by 2.5%, which is the proportion of complaints relating to financial hardship for the TIO.

Current cost of compliance, complaints and reconnections

Our estimate of the current costs of compliance is shown in Table 3.

Table 3:       Status quo costs

Note: the cost of complaints to CSPs was not included in the quantitative analysis. Changes to these costs for CSPs were assumed to be cost neutral when balanced against an increase in time and costs that CSPs would spend on implementing additional financial hardship arrangements in place instead of dealing with complaints.

Option 2A – Outcomes-based (discretionary)

The ACMA considers that direct regulation as proposed in Option 2A would create more compliance incentives for CSPs than the existing code, leveraging a broader range of enforcement options. However, it is anticipated that despite the potential advantages, outcomes-focussed regulation with significant discretionary application  might be challenging for CSPs to implement and the ACMA to enforce, possibly resulting in a marginal increase in the number of customers on formal financial hardship arrangements.

The ACMA’s estimated impact of the change are set out in Table 4.

Table 4:       Modelled change in outcomes Option 2A

The anticipated increase in customers on financial hardship arrangements are based on comparisons with similar financial hardship arrangements in the electricity industry in Australia. We expect a modest increase given the stronger incentive to comply but consider the more clearly enforceable rules in key areas contained within Option 2B (similar to those that apply to the electricity sector) would provide a significantly greater increase of around 30% - which aligns with results reported for the electricity industry.[49]

Benefits

Industry would have flexibility in designing strategies tailored to operational models and customer base. This option could also encourage innovation in developing approaches to support customers facing financial hardship, with potential for consumers to benefit from more diverse and creative solutions tailored to different customer needs.

The benefits that could be estimated are set out in Table 5.

Table 5:       Annual benefits under the Option 2A

In addition to the items valued above, Option 2A is expected to impose various other benefits and costs on CSPs. Consultation on financial hardship reforms in the electricity sector suggest that these impacts are likely to offset each other.[50] For example, as mentioned above, the cost to CSPs of dealing with complaints relating to financial hardship are likely to be cost neutral when balanced against the time CSPs would instead spend on putting financial hardship arrangements in place for those customers.

Beyond the estimated benefits above, Option 2A is also expected to deliver a range of advantages to customers who are transitioned to formal financial hardship provisions, thereby avoiding disconnection. These benefits encompass mitigating factors such as loss of services, which can be particularly disadvantageous for individuals facing disconnection. 

Costs

A range of costs have been identified for the ACMA and are set out in Table 6, below. Under Option 2A, it is anticipated that the Standard will result in an increase in compliance and enforcement effort from the ACMA immediately following implementation. Assuming that under Option 2A, there is some increase in support provided to customers facing financial hardship by the CSPs, compliance and enforcement effort is expected to reduce in the subsequent years. The reduction in costs is lower than status quo but still higher than Option 2B as there is some difficulty in enforcing and ensuring compliance with an outcomes-based standard. The same argument applies to communication and education of the Standard by ACMA.

Table 6:       Estimated ACMA costs under the Option 2A over 10 years

CSP costs

CSPs would face potential costs associated with developing and implementing strategies for early identification and assistance if these were not already in place. There may also be costs related to adapting operational models to comply with any new requirements that are additional to those that CSPs must already comply with in the TCP Code.

The number of CSPs covered by the Standard has been estimated to be approximately 350.

For the purposes of this impact analysis, CSPs have been characterised as follows (based on the volume of services in operation):

           2 large CSPs (over 10 million services)

           4 medium CSPs (1 million to 10 million services)

           27 small CSPs (30,000 to 1 million services)

>        317 very small CSPs (1 to 30,000 services)

The total allocation of costs is set out in Table 7 below.

Table 7:       Costs to all CSPs to comply with enforceable obligations under Option 2A over 10 years[51]

Where costs accrue in complying with Option 2A, the costs are predominantly one-off system development costs, including potential new systems or procedures and staff training.

Option 2B – Outcomes-based (enforceable)

The ACMA considers a more enforceable standard in relation to key provisions would create a robust compliance incentive for CSPs, substantially increasing the number of customers on formal financial hardship arrangements.

Table 8:       Modelled change in outcomes Option 2B

The estimation of input values (such as 30% of potential disconnection customers on formal financial hardship provisions) is based on comparisons with similar financial hardship arrangements in the Australian electricity industry. [52]

Benefits

Option 2B will establish clear rules and obligations in key areas, providing a consistent, community-wide approach for CSPs and their customers, while still maintaining an outcomes-based focus.

Increased awareness of financial hardship arrangements empowers consumers, potentially improving customer relations and CSPs reputation.

Option 2B can more effectively address identified gaps in existing protections, establishing a baseline level of support for all customers experiencing financial hardship. Consistency and clarity in financial hardship policies, will make it easier for customers to navigate, saving time and preventing unnecessary stress.

The most significant benefit would be an increase in consumers accessing financial hardship arrangements and a reduction in disconnections and the subsequent impacts that lack of access to telecommunications services can have.

The benefits that could be readily estimated are set out in Table 9.

Table 9:       Benefits under the Option 2B

As with Option 2A, Option 2B is expected to impose various other benefits and costs on CSPs. Consultation on financial hardships reforms in the electricity sector suggest these impacts are likely to offset each other.

Costs

ACMA costs of developing and implementing reforms are expected to be higher initially but then drop lower than the base case in subsequent years. The reduction in costs is greater in Option 2B compared to Option 2A because a more detailed standard in key areas would be less complex to implement and enforce than a standard with more discretion.

Table 10:   ACMA costs under the Option 2B

CSP costs

CSP costs are estimated to drop significantly once new systems and procedures have been implemented.

Table 11:   Costs to all CSPs to comply with enforceable obligations under Option 2B[53]

For the purpose of this impact analysis, we have considered how the incidence of these compliance costs might potentially be distributed across CSPs. This is based on the following assumptions:

>        CSPs are currently complying with existing TCP Code obligations

>        one hour of labour costed at $73 per hour

>        the time required for staff to administer the new mandatory requirements in subsequent years is expected to diminish with the decreasing number of services a CSP has in operation.

It is likely to expect that some of the industry costs identified above will be offset by the benefits gained as consequence of the Standard.

Aggregation of costs and sensitivity analysis

Table 12 below shows the aggregation of expected costs and benefits for each option relative to the status quo over a 10-year period.

Based on the quantified costs and benefits, Option 2B is expected to yield a net benefit while Option 2A is not.

It is likely that the benefits extend beyond the values presented here, as there are a range of consumer benefits that are not readily quantifiable. These unquantifiable benefits are diverse and include significant social advantages for Australians, extending beyond estimated values. By providing appropriate financial support and preventing disconnections, the potential benefits encompass averting the loss of essential services and mitigating the subsequent impacts of restricted access to telecommunications. This goes beyond just a ‘feel good’ benefit for customers facing financial hardship receiving appropriate assistance, extending to a broader community satisfaction in knowing that those in vulnerable circumstances have enhanced protections.

The expected decrease in disconnections not only promotes digital inclusion but also serves as an important factor in countering compromised health, increased loneliness and social isolation. Challenges such as heightened stress and anxiety, potential credit consequences, and vulnerability for specific groups are alleviated. Providing appropriate financial support yields far-reaching benefits, acknowledging the essential role of telecommunications in various activities, including work, education, health, and government support.

Option 2B produces a benefit cost ratio of 1.63, which indicates that the reform will provide a return of $1.63 for every $1 invested. Further detail of cost inputs into the CBA are included in Appendix A.

Table 12:   Collated costs and benefits

Sensitivity analysis

Table 13 below models the impact of different discount rates impact the results. While the values alter under the different discount rates, the discount rates do not impact the conclusion that Option 2B is preferable as it is considered to be both more effective at resolving the identified issues, it also is anticipated to deliver a net benefit – even when benefits to consumers are excluded due to difficulties in quantifying these benefits.

Table 13:   Sensitivity analysis

Regulatory burden measurement

Regulatory Burden Measurement utilises the same information as the cost benefit analysis but focusses only on the costs that fall to businesses (including government-owned corporations), community organisations and individuals.

Regulatory Burden Measurement was undertaken in line with Australian Government guidance[54] identifies the average annual change in regulatory costs is measured against ‘business as usual’ costs. The framework includes consideration of regulatory compliance costs (both administrative costs and substantive compliance costs) as well as delay costs. For this reform no delay costs were identified and so the analysis focussed on the likely compliance costs.

Table 14:   Average annual regulatory costs (from business as usual)

The analysis determined that Option 2A would have a small increase in costs for industry, but this is predicted to be offset by a reduction in costs for individuals – although this is unquantified. The unquantified reduction in costs correlates to the range of consumer benefits described above that are not readily quantifiable. 

Option 2B is expected to result in a decrease in costs for industry as well as the predicted reduction in costs for individuals.

Who was consulted and what did they say?

Consultation

Extensive consultation has been undertaken leading up to the Minister's direction for the ACMA to establish a standard. This extensive engagement, spanning several years, involved key stakeholders and diverse sources, shaping our understanding of crucial consumer protections, with a focus on addressing financial hardship. The consultation landscape includes:

>        ACMA research and reports over the past 4 years have been instrumental, complemented by insights from diverse stakeholders, culminating in submissions to the TCP Code review. This collective input consistently highlights the significance of financial hardship as a prevalent issue, prompting the need for more robust measures aligned with reasonable consumer expectations.

>        The ACMA has consistently worked towards enhancing financial hardship arrangements through research, reports, consultation on consumer vulnerability in July 2021[55], the issuance of the Statement of Expectations in May 2022, and the What Consumers Want position paper in July 2023. This commitment has been echoed by the TIO, the ACCC, and consumer groups such as ACCAN, all advocating for decisive action.

>        Input from current consumer representatives[56] at the ACMA’s CCF over an extended period has reinforced the need for more comprehensive financial hardship protections. This sentiment aligns with feedback obtained through public consultations on the Statement of Expectations and one-on-one stakeholder meetings with ACCAN, the Consumer Action Law Centre, Isolated Children's Parent Association, and Westjustice in August and September 2022.

>        A consumer round table convened by the minister in March 2023 facilitated a broader dialogue involving industry and consumer groups, the First Nations Digital Inclusion Advisory Group, the ACMA, and the TIO. Non-industry stakeholders consistently called for direct regulation of consumer protections and tailored information to enhance consumer understanding.

This perspective, voiced consistently over time and reflected in submissions to the Part C of the Consumer Safeguards Review,[57] and the Communications Alliance TCP Code review discussion paper, emphasises financial hardship as a substantial concern. Stakeholders, including the TIO, ACCC, and ACCAN, contend that direct regulation is necessary to address existing inadequacies and yield better outcomes for consumers by recognising the fundamental importance of telecommunications services, leveraging government and regulator expertise, and empowering the ACMA to respond promptly and effectively to non-compliance.

The minister sought input from key stakeholders while developing the Direction, with consumer representatives reiterating strong support for clearly enforceable and specific regulation. Industry stakeholders, while generally supportive of improving consumer outcomes, did not expressly oppose direct regulation, emphasising the need for practical and effective rules that align with desired consumer outcomes without restricting current flexible relief mechanisms offered by CSPs.

The Minister's evidence-based approach in developing the Direction relied on the ACMA's extensive research, reports, bolstered by TIO reports and input from consumer representatives. This comprehensive foundation paved the way for subsequent consultation on a draft industry standard.  

Consultation on draft Standard

Full public consultation on a draft industry Standard[58] was conducted from 24 October 2023 to 24 November 2023.

This process included targeted consultation with key members of industry, government and consumer groups, ensuring a wide opportunity for affected stakeholders to give input. We informed key stakeholders of the publication of the documents and invited comment on the draft Standard and on the issues set out in the consultation paper.

The ACMA complied with statutory consultation obligations outlined in subsection 125AA(3) and sections 132, 133, 134, and 135 of the Act through:

         a public notice published in the Australian newspaper on 7 October 2023 (a newspaper that circulates in each state and territory)

         public consultation for a period of 30 days[59]

>        consultation with the ACCC, the TIO, the Office of the Australian Information Commissioner (OAIC), telecommunications industry bodies, Communications Alliance and consumer bodies including ACCAN.

Summary of stakeholder feedback

The consultation invited comments on several key issues and general feedback. The ACMA received 14 submissions from consumer and industry representatives, government organisations and 2 individuals. Stakeholders included:

>        consumer groups:

>      ACCAN

>      Uniting (Vic/Tas)

>      South Australian Council of Social Service (SACOSS)

>        industry:

>      TPG

>      Telstra

>      Optus

>      Communications Alliance

>      Starlink

>      Internet Association Australia (IAA)

>        government:

>      Office of the Australian Information Commissioner (OIAC)

>      ACCC

>      TIO.

Generally, industry representatives consider the TCP Code to be adequate and working well. Some industry representatives have also expressed concern there is insufficient evidence of a need for direct regulation and that referring to telecommunications services as ‘essential’ is problematic given it is not deemed to be essential by law. In general, industry considered the draft Standard overly prescriptive. In contrast, the TIO, the ACCC and consumer groups were supportive of direct regulation viewing the Standard as a significant improvement over the vague and inadequate protections in the TCP Code, but also identified areas where the draft Standard should be strengthened.

Key themes from the submissions include:

         Implementation timeframe – industry members acknowledged the Direction’s requirement for the Standard to take effect from 29 March 2024, but noted the challenges in meeting this deadline. They suggested an initial focus on education rather than strict compliance and enforcement. 

         Definition of Consumer – industry members argued that the annual spend threshold in the draft Standard would capture CSPs beyond residential and small business customers. They advocated for maintaining the spend limit of $40K as outlined in the TCP Code and relevant industry standards and service provider determinations.

         Definition of financial hardship – some stakeholders argued the need to clarify that the list of situations constituting financial difficulty is not exhaustive, while others sought a broader definition with fewer or no examples. Industry expressed concern about the phrase ‘customers believes they can pay’ as it is subjective and not measurable, while other stakeholders consider it could disincentivise CSPs from offering affordable plans.

         Use of terminology – many stakeholders expressed concern that the term 'financial hardship' could be stigmatising, potentially deterring customers from seeking assistance, and suggested less alienating language. Industry members expressed concern that financial hardship assistance should only be provided to cover essential elements of telecommunications services. Industry noted there was no common consistent legislative definition across state and commonwealth jurisdictions which includes telecommunications as an essential service.

         Use of applications forms – industry members raised concerns with mandating an application form, noting not all CSPs require a customer to fill out an application form and not all channels were suitable. They expressed that it could be a burden for consumers and added unnecessary financial and administrative burden on CSPs.

         Options for payment/assistance – feedback from industry indicated that greater clarity was needed around the application of payment assistance including that the options listed were non-exclusive.

>        Transitional arrangements - industry had concerns the transitional arrangement provisions were overly burdensome.

These issues, along with editorial feedback from all submissions, have been considered in shaping the approach to finalise the Standard.

What is the best option from those considered and how will it be implemented?

Option 2B – outcomes-based (enforceable) - is the best option with the highest net benefit of the options considered and more closely aligns with the Direction. This option most effectively and efficiently addresses identified deficiencies in the TCP Code related to financial hardship. It ensures customers experiencing financial hardship receive adequate and appropriate support while staying connected to essential telecommunication services. The costs associated with implementing clearly enforceable obligations in key areas are mitigated as some align with existing TCP Code provisions.

Directly enforceable and clear obligations have the potential for significant positive impacts, including proper support for customers in financial hardship and minimising the risk of disconnection, thus enhancing consumer confidence in the telecommunications industry. Clear and specific obligations establish a baseline level of support, promoting consistency and clarity in financial hardship policies.

Increased awareness of financial hardship arrangements empowers consumers by ensuring they are adequately informed about the availability of financial hardship support and how to access it. This increased awareness can also improve customer relations for CSPs, potentially yielding reputational benefits.

Cost impacts on industry should only arise where the new rules differ from those already in the TCP Code, and these costs are likely to be mitigated by existing arrangements some CSPs already have in place for assisting customer in financial difficulty.

Clear and directly enforceable obligations incentivise compliance, potentially reducing complaints to the TIO, the ACMA and CSPs related to financial hardship and associated costs. They ensure consistent practices, enabling the ACMA to monitor and enforce compliance more efficiently.

Consultation and engagement indicate strong support for clear and directly enforceable obligations from government and consumer groups. The TCP Code’s financial hardship provisions demonstrate the industry’s general support of enforceable obligations to assist customers experiencing financial hardship.

Option 2A – Implementing the Direction in an outcomes-focussed manner with significant discretion in all areas is unlikely to adequately address identified consumer protection gaps in the TCP Code, nor would it align with the requirements of the direction. While an industry standard enhances enforcement options, outcomes focussed regulation may be challenging to enforce and would unlikely offer any substantial improvement in consumer outcomes compared to the TCP Code.

Status quo

Deferring to the TCP Code review process would result in significant longer time before improvements are in place, not addressing the urgency of the problem. Past experience indicates a significant risk of protracted negotiations for a final updated code, potentially prompting the ACMA to make a standard if the revised code lacks adequate consumer safeguards.

This option is unlikely to sufficiently protect consumers, posing an unacceptable level of harm due to the lack of clear rules for obtaining help during financial difficulties and potential disconnection from essential telecommunications services.

Implementation

The potential risks associated with implementation include industry opposition and the complexity of implementing effective regulations in a rapidly evolving technological landscape. The possibility of industry opposition exists, given concerns about additional regulatory burdens and operational flexibility. The consequences could involve resistance to compliance, affecting the success of the Standard.

To mitigate industry opposition, the ACMA has, and will, employ a collaborative approach, engaging in regular and transparent communication to address concerns constructively. The outcomes-based design of the Standard accommodates industry changes, and continuous monitoring will allow for the Standard to be varied based on evaluations of effectiveness. Stakeholder engagement will remain pivotal, together with effective post-implementation enforcement and compliance monitoring.

It is relevant to note that most CSPs should already have systems and processes in place for dealing with customers experiencing financial hardship by complying with existing TCP Code rules. New policies, systems, and processes will only be necessary where the Standard goes beyond the requirements of the TCP Code or where telcos are not currently compliant with TCP Code requirements.

The industry Standard will be implemented as outlined in Option 2B and in accordance with the Direction. The Standard must be determined by 15 February 2024 and commence by 29 Match 2024.

Engagement to support implementation

The ACMA intends to engage with Communications Alliance to ensure CSPs are aware and understand where the Standard goes beyond the TCP Code requirements. This may include providing additional guidance leading up to and following their introduction.

Engagement can also occur through a range of forums including the Communications Alliance TCP Code review working committee and the CCF. Discussion in these forums will enable the ACMA to stay informed of and address any implementation concerns that industry may have, encouraging ongoing best practice. The ACMA will work with CSPs if implementation issues are identified.

Financial hardship is a compliance priority[60] for the ACMA in 2023-24 with activities including targeted compliance against the new obligations and potential investigations. Monitoring complaints received by the TIO and risk-based escalation interventions will be undertaken where appropriate.

Education campaign

The ACMA possesses various regulatory tools to encourage compliance, including education of industry and customers. Stakeholder networks will be leveraged to further engage with consumers experiencing financial hardship.  A modest education program may be used to help customers and industry transition.

Transitional arrangements are outlined in the Standard. Feedback from industry members has been considered to ensure these arrangements are not overly burdensome. A variation to the TCP Code will be required to remove financial hardship obligations once the Standard is made.

How will you evaluate your chosen option against the success metrics?

The ACMA will monitor and evaluate the implementation of the Standard to ensure it aligns with the objectives and success metrics outlined in Question 2 and gauge its effectiveness. This evaluation will be an integral part of the ACMA’s ongoing regulatory reform, monitoring and compliance activities.

The post-implementation phase will involve ongoing collaboration between the ACMA and relevant stakeholders. The ACMA will be responsible for an active compliance work program tailored for the Standard and for evaluating the success metrics, as set out below.

Financial hardship is a compliance priority for the ACMA in 2023-24, and in announcing that it would direct the ACMA to make a Financial Hardship Standard, the Government highlighted the importance of keeping customers connected in a media release of 5 September 2023.[61] The ACMA anticipates that financial hardship will remain a focal point for the foreseeable future.

The ACMA will implement an active compliance work program specifically tailored for the Standard, commencing shortly after the Standard comes into effect on 29 March 2024. This program will inform post-implementation decisions and will encompass:

>        monitoring complaints relating to financial hardship received by the TIO

>        scrutiny of industry data to assess compliance and identify potential areas of concern

>        escalation processes where appropriate, including potential investigations and enforcement activities where necessary

>        using the CCF as a regular forum for monitoring and evaluating the effectiveness of the measures set out in the Standard

>        conducting regular consumer experience research to gain insights into the Standard’s impact on consumers. Substantive consumer experience research would commence 18 months after the Standard comes into effect to facilitate closer scrutiny.

Success in achieving the objectives of the Standard will be measured and evaluated by the ACMA through the following key metrics:

>        comparison of industry’s increased adoption of financial hardship arrangements compared to the number of customers experiencing hardship

>        measurement of enhanced consumer awareness regarding the availability of financial hardship support

>        assessment of the accessibility of information about available financial hardship support from CSPs

>        monitoring and analysis of the decrease in the number customers disconnected while in financial hardship

>        analysis of the reduction in complaints received by the TIO from consumers experiencing financial hardship

>        collection of positive feedback from consumer groups and community organisations confirming successful consumer access to appropriate financial hardship assistance.

These success metrics will serve as robust indicators of the effectiveness and impact of the Standard, ensuring that it fulfills its objectives in supporting consumers facing financial challenges.

Public reporting by the ACMA on the Standard’s outcomes will be an essential aspect of the post-implementation phase. Reporting will detail key metrics, compliance levels, and any identified areas of concern. Actively seeking input from industry stakeholders, consumer groups and the general public will ensure diverse perspectives on the Standard's impact. This iterative process of reporting and consultation will contribute to the ongoing refinement and improvement of the Standard, ensuring that it remains effective and responsive to evolving challenges.

Appendix A: Costs and benefits inputs and data

Summary list of identified costs and benefits

The costs and benefits identified in the previous sections are collated in Table 15.

Table 15:   Summary of costs and benefits identified for each stakeholder group

Summary of costs and benefits for cost model

Table 16:   Summary of costs and benefits per cost model

CSP costs

For the purposes of this impact analysis, CSPs have been characterised as follows (based on the volume of services in operation):

>        2 large CSPs (over 10 million services)

>        4 medium CSPs (1 million to 10 million services)

>        27 small CSPs (30,000 to 1 million services)

>        317 very small CSPs (1 to 30,000 services).

The following tables outline the costs for CSPs used in the CBA.

Table 17:   Year 1 costs for CSPs under Option 2A

Table 18:   Ongoing costs for CSPs under Option 2A

Table 19:   Year 1 costs for CSPs under Option 2B

Table 20:   Ongoing costs for CSPs under Option 2B

[1] ACMA, Financial hardship in the telco sector: Keeping the customer connected (May 2023), accessed 11 December 2023.

[2] ACMA, Financial hardship: telco and other essential sectors – Quantitative research (May 2023), accessed 11 December 2023.

[3] ACMA, Financial hardship in the telco sector: Keeping the customer connected (May 2023), accessed 11 December 2023.

[4] TIO (Telecommunications Industry Ombudsman), A time for change – Three years of systemic investigations in review (June 2023), accessed 11 October 2023.

[5] Telecommunications (Financial Hardship Industry Standard) Direction 2023.

[6] Part 6, Telecommunications Act 1997, accessed 11 October 2023.

[7] Compliance priorities 2023–24 | ACMA.

[8] Eight telcos breach consumer protection rules | ACMA.

[9] Help if you can't pay your bill | ACMA.

[10] ACMA, Customer financial hardship in the telco industry: State of play report 2018–19; ACMA, Customer financial hardship in the telco industry: State of play report 2019–20; ACMA, Customer financial hardship in the telco industry: State of play report 2020–21, accessed 18 October 2023.

[11] ACCAN and PIAC, Direct Debit in Telecommunications (April 2023), accessed 11 October 2023.

[12] The Hon Michelle Rowland MP, Minister for Communications, Albanese Government to improve safeguards for telco consumers experiencing financial hardship. (Media Release, 6 July 2023), accessed 15 December 2023.

[13] The Hon Michelle Rowland MP, Minister for Communications, Better support for telco customers experiencing financial hardship, (Media Release, 5 September 2023), accessed 15 December 2023. Telecommunications (Financial Hardship Industry Standard) Direction 2023.

[14] Telecommunications Industry Ombudsman 2022-23 Annual Report, p.46, accessed 13 November 2023.

[15] ABS (Australian Bureau of Statistics), Consumer Price Index, Australia: June Quarter 2023 (26 July 2023), accessed 4 October 2023.

[16] ACMA, Financial hardship: telco and other essential sectors – Quantitative research and Consumers’ experiences with telco financial hardship – Qualitative research (May 2023), accessed 6 October 2023.

[17] Telcos can offer payment plans and bill payment extensions outside of formal financial hardship programs. However, these do not attract the TCP Code protections, such as from credit management action, afforded the customer on a formal financial hardship program.

[18] Good Things Foundation, The digital divide, accessed 8 December 2023.

[19] Australian Digital Inclusion Index, accessed 8 December 2023.

[20] Relationships Australia, Submission to the ACMA's Consumer vulnerability: expectations for the telecommunications industry, accessed 8 December 2023.

[21] TIO,  A time for change – Three years of systemic investigations in review (June 2023), accessed 11 October 2023.

[22] TIO, Thematic review: Our financial hardship complaints 2021 – 2023, accessed 8 December 2023.

[23] ACMA, Eight telcos breach consumer protection rules (July 2023), accessed 6 October 2023.

[24] ACMA, Telstra fails to warn customers about service restrictions, 20 April 2023, accessed 8 December 2023.

[25] Australian Communications Consumer Action Network (ACCAN) and the Public Interest Advocacy Centre (PIAC), Direct Debit in Telecommunications (April 2023), accessed 6 October 2023.

[26] Communications Alliance - TCP Code Review 2024.

[27] TIO submission to TCP Code review, Submission - Communications Alliance’s 2024 TCP Code review/TIO June 2023, accessed 17 October 2023.

[28] ACCC, ACCC submission to TCP Code review June 2023, accessed 17 October 2023.

[29] ACCAN, ACCAN submission to TCP Code review June 2023, accessed 17 October 2023.

[30] Australian Consumer Action Network (ACCAN), Consumer Policy Research Centre (CPRC), Consumer Action Law Centre (CALC), Western Community Legal Centre Limited (WEstjustice), South Australian Council of Social Services (SACOSS), Isolated Children’s Parents’ Association of Australian (ICPA); NSW Business Chamber (Business NSW).

[31] Seventeen consumer organisations withdrawing from the TCP Code review process underscores the lack of confidence in the existing regulatory framework.

[32] PricewaterhouseCoopers (PwC), Telecommunications Consumer Safeguards: International and sectoral comparisons of consumer protections for choice and fairness in the retail relationship between customers and their providers, accessed 2 January 2024.

[33] NZ Telecommunications Forum Disconnection Code

[34] Communications Alliance, Communications Alliance TCP Code Discussion Paper May 2023, accessed 17 October 2023.

[35] TIO  Submission to 2024 TCP Code review June 2023, accessed 17 October 2023.

[36] ACCC, Submission to TCP Code review June 2023, accessed 17 October 2023.

[37] ACCAN, Submission to TCP Code review June 2023, accessed 17 October 2023.

[38] TIO Submission to Consumer Safeguards Review - Part C: Choice and fairness | The Telecommunications Industry Ombudsman October 2020, accessed 17 October 2023.

[39] The ACMA may determine an industry standard under Part 6 of the Telco Act in limited circumstances. This includes where an industry code that has been made is deficient (section 125 of Telco Act).

[40] ACMA, Help if you can't pay your phone or internet bill, accessed 18 October 2023.

[41] ACMA, Rules to protect customers in financial hardship, accessed 18 October 2023.

[42] Explanatory Statement to Telecommunications (Financial Hardship Industry Standard) Direction 2023 .

[43] As noted below, the TIO is funded through membership fees that are charged to the CSPs

[44] Positive values here are costs and negative values are benefits, relative to the status quo.

[45] See for example electricity industry documents such as the AEMC (Australian Energy Market Commission) Rule Determination: National Energy Retail Amendment (Strengthening Protections for Customers in Hardship) Rule 2018 (15 November 2018), accessed 15 December 2023.

[46] Source: ACMA, Financial hardship in the telco sector, Keeping the customer connected, p. 40, accessed 6 December 2023

[47] ACMA, Financial hardship in the telco sector, Keeping the customer connected, Figure 6, p. 18, accessed 12 December 2023

[48] The 236,332 figure itself is also likely a low estimate because it is based on data from only 83% of the market.

[49]ESC (Essential Services Commission), Payment difficulty framework implementation review 2022: Findings report, (31 May 2022), accessed 15 December 2023. www.esc.vic.gov.au/sites/default/files/documents/RPT%20-

[50] AEMC (Australian Energy Market Commission) Rule Determination: National Energy Retail Amendment (Strengthening Protections for Customers in Hardship) Rule 2018 (15 November 2018), accessed 15 December 2023.  

[51] See Appendix A of this RIA for a breakdown of regulatory costs.

[52] ESC (Essential Services Commission), Payment difficulty framework implementation review 2022: Findings report, (31 May 2022), accessed 15 December 2023.

[53] See Appendix A of this RIA for a breakdown of regulatory costs.

[54] OIA (The Office of Impact Analysis), Regulatory Burden Measurement Framework (6 September 2023), accessed 11 December 2023.  

[55] ACMA, Consumer vulnerability: expectations for the telco industry, accessed 12 December 2023.

[56] Australian Consumer Action Network (ACCAN), Consumer Policy Research Centre (CPRC), Consumer Action Law Centre (CALC), Western Community Legal Centre Limited (WEstjustice), South Australian Council of Social Services (SACOSS), Isolated Children’s Parents’ Association of Australian (ICPA); NSW Business Chamber (Business NSW).

[57] Department of Infrastructure, Transport, Regional Development, Communications and the Arts, Consumer Safeguards Review consultation—Part C: Choice and fairness, accessed 8 December 2023.

[58] ACMA, Proposed Telecommunications Financial Hardship Industry Standard, accessed 5 December 2023.

[59] Legislative requirement is for minimum of 30 days.

[60] ACMA, 2021, ACMA Compliance priorities 2021–22, viewed 11 October 2021.

[61] The Hon Michelle Rowlands MP, Minister for Communications, Better support for telco customers experiencing financial hardship | Ministers for the Department of Infrastructure, accessed 15 December 2023.