A new report by Financial Counselling Australia clearly shows that the telecommunications industry must improve its response to customers who are experiencing financial hardship.
The report, ‘Telcos and Financial Hardship: Feedback from the Frontline’, has two parts:
- A survey of financial counsellors
- Desk top research on other relevant studies and data
Every financial counsellor who took part in the survey said they have clients struggling to pay their telco bills. A quarter of respondents said more than 50% of their clients are struggling to pay.
Telcos refer their customers to financial counsellors and benefit when the customers get back on track.
Other key findings of the report show:
- Overall, telco hardship practices are poor
- Mis-selling is common throughout the industry, with around 80% of financial counsellors saying they have clients with debts where mis-selling has occurred
- Affordability checks are inadequate, which places people under financial stress
Financial counsellors rated the three major telcos on the way they treated customers in hardship, where 1 was the lowest rating and 10 the highest. Telstra scored 6.2, Optus 5.6 and TPG/Vodafone 4.4. These ratings are poor.
Nearly a quarter of Australia’s 950 financial counsellors took part in the survey. This was a remarkable result, given the survey was only open for the three days immediately before Easter.
The timing of the survey coincided with changes in the level of government support that took effect at the end of March 2021: the end of JobKeeper and a reduction in the JobSeeker payment.
These changes emphasise the need for telcos to improve their hardship practices and to work collaboratively with financial counsellors, to help struggling customers manage with less income following the pandemic.
Financial counsellors assist people experiencing financial difficulty. They provide information and advice to help people tackle their financial problems and to minimise the risk of issues occurring in the future. Financial counselling services are free, confidential and independent.
Quotes from the CEO of Financial Counselling Australia, Fiona Guthrie AM:
“One of the major drivers of people being unable to pay their telco bills is mis-selling. Too many people end up with devices they don’t need, don’t understand and can’t afford.”
“Financial counsellors gave example after example in the survey of mis-selling to people who were vulnerable. These groups of people then end up in financial hardship.”
“Telco financial hardship practices just aren’t good enough. Some of the problems financial counsellors pointed to included telcos not offering hardship arrangements to customers at all, or not offering affordable arrangements.”
“As Australia recovers from the pandemic, telcos must ensure that people in financial hardship are treated fairly.”
“Telcos provide essential services. Without a phone or internet, people miss out on jobs, can’t make medical appointments or stay in touch with government services. That’s why telcos must support their vulnerable customers.”