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Telstra breaches financial hardship rules after IT system errors

Telstra has once again been called out by Australia’s communications regulator, with the telco ordered to comply with financial hardship rules or face penalties of up to $250,000.

An investigation by the Australian Communications and Media Authority (ACMA) found that Telstra had wrongly taken credit management action against 70 customers on financial hardship agreements, a move that is in direct violation of the Telecommunications Consumer Protections (TCP) Code. According to the Code, telcos must not apply credit management to a customer if a financial hardship agreement is in place or is being discussed, unless the customer hasn’t meet their own obligations under the hardship arrangement.

What did Telstra do wrong?

Financial hardship policies apply to customers facing short or long-term financial difficulty, and are designed to provide those customers with sustainable access to essential telecommunications services. Telcos can work with customers on alternative financial arrangements, such as postponing payments or waiving fees, and on keeping customers connected through options including spend or usage controls, moving to a lower-priced service, or adding hard caps to prevent excess use charges.

If a customer is under a financial hardship agreement, their telco cannot take credit management action such as service suspensions, disconnections or debt collections. However, the ACMA’s investigation found that Telstra had breached this policy in dealing with 70 customers between August 2019 and April 2022.

Of the impacted Telstra customers, 22 had their service restricted, four had their service suspended, and five were disconnected completely. Other customers had debts referred to collection agencies, or received calls and letters requesting payment for outstanding bills.

“With the pressures caused by rising costs of living and the COVID-19 pandemic, it’s more important than ever for telcos to support their customers, particularly those in difficult circumstances,” Acting ACMA Chair Creina Chapman said.

“Telco services like phone and internet are now essential to daily life, used for everything from work and education, through to health and government services, so even briefly suspending or disconnecting customers can cause a real disruption to their lives.”

Telstra apologises, blames IT issues

The ACMA said that the policy breaches occurred due to issues with Telstra’s legacy IT systems, which prevented or delayed status updates for the affected customers. Of the 70 impacted customers, 61 had their issues resolved within 24 hours.

“We found and fixed the vast majority of these errors quickly, but we’re sorry that our processes let these customers down,” Telstra Customer Service Executive Kate Cotter said.

“The issue was caused by legacy systems not synchronising properly and we are well on the way to ensuring this is a thing of the past, by replacing these old systems with seamless digital experiences. In the meantime, we have implemented IT fixes and regular manual checks to prevent further issues while we complete our systems overhaul.”

This isn’t the first Telstra compliance breach attributed to IT problems. Earlier this year, the telco was found to have delayed paying compensation to over 67,000 customers, and to have overcharged both Telstra and Belong customers for broadband services. In both cases, Telstra self-reported the errors to the ACMA, and said that it would be updating and improving its IT and billing systems to prevent future issues.

“Telstra must continue to address these longstanding issues as a matter of urgency so that its systems can deliver on customer safeguards,” Ms Chapman said.

“Protecting telco customers experiencing financial hardship is an ACMA compliance priority and all telcos can expect greater scrutiny of their dealings in these matters.”

Fortunately for Telstra, the ACMA has only issued the telco with a formal direction to comply with the TCP Code. However, if the telco’s non-compliance continues, it could be hit with penalties of up to $250,000.

That quarter-million-dollar fine, however, is a slap on the wrist compared to the penalty levelled at energy-provider-turned-telco Origin, which was ordered to pay out $17 million in June after failing its own customer hardship obligations.

Financial hardship policies: what to do if you can’t pay your bill

With the cost of living skyrocketing and Christmas just weeks away, many Aussie households are struggling to keep up with bills. If you’re unable to pay your phone or internet bill, your telco will most likely offer a financial hardship policy (sometimes called a customer hardship or financial assistance policy) to help you navigate this tough time without losing vital communication services.

Depending on your telco, you may be required to apply for assistance online, or call them directly to discuss your options. Your provider may offer the following solutions:

  • Switching you to a more appropriate plan, such as prepaid or a lower-cost service
  • Setting up flexible payment options
  • Waiving cancellation or late payment fees
  • Restricting your service
  • Releasing you from your contract and allowing you to return a device without penalty

If you’re unhappy with the options suggested by your phone or internet provider, you can also get in contact with the National Debt Helpline at ndh.org.au or on 1800 007 007 for further assistance.


Read more: What to do if you can’t pay your phone bill


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Tara Donnelly
Utilities Editor
Tara Donnelly is an internet and mobile expert - sectors she’s spent a decade covering - and also oversees energy and consumer technology content. She holds a Bachelor of Communications from the University of Canberra and has shared her expertise on national media including 9 News, 7 News, Sunrise and the ABC.

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