Wednesday, 27 February 2019 18:34

TIO lists sales practices driving consumer telco debt

TIO lists sales practices driving consumer telco debt Pixabay

The Telecommunications Industry Ombudsman says it has identified four common selling practices by telecommunications service providers that lead to consumers making financial commitments which they find impossible to keep.

The findings were listed in a report from the TIO which looked at how providers could improve selling practices for post-paid plans they offer to reduce financial over-commitment by consumers.

The first selling practice was by conducting credit assessment checks primarily focused on the commercial risk appetite of the provider and not the customer's ability to pay. This led to insufficient inquiries being made about the customer's financial situation.

Secondly, there were situations where sales staff were not given an adequate role in responsibly selling post-paid plans. Commission-based income and rewards based on sales figures would lead to staff acting to boost their own income at the cost of customers.

A third situation mentioned was that of allowing customers to obtain multiple or additional post-paid plans with relatively low barriers that carried the risk of committing too much financially.

And a fourth way customers were hoodwinked was by allowing sales representatives who were appointed on an account to sign up for additional post-paid plans without the account holder's knowledge.

The TIO recommended the following ways in which situations which led to customers over-committing:

  • "Before agreeing to sell a post-paid plan, make reasonable inquiries about a customer’s financial situation to assess the customer’s ability to meet minimum charges over the plan’s contractual term.
  • "Deliver regular staff training in recognising and supporting vulnerable and disadvantaged customers, as well as ensuring sales training includes a focus on ethical selling.
  • "Implement extra safeguards where customers are purchasing multiple or additional post-paid plans. At a minimum, safeguards should include removing or reducing automatic credit pre-approvals solely based on a customer’s past payment history, and asking whether the customer would be the principal end user for each post-paid plan.
  • "If someone else will be the principal end user, explain they remain liable for all of the costs of the plan.
  • "Prevent account representatives from signing up for post-paid plans without the account holder’s knowledge."

Commenting after the TIO released its findings on selling practices, the head of telecommunications industry lobby group, Communications Alliance, John Stanton, said companies were pushing for tighter rules around credit assessment and selling practices.

The new safeguards are in a revised version of the enforceable Telecommunications Consumer Protections Industry Code, which was recently submitted to the industry regulator, the Australian Communications and Media Authority, for registration. The TIO has played a role in the revision.

The revised guidelines include:

  • stronger rules around responsible selling practices, including that suppliers must ensure – including via disciplinary sanctions – that sales representatives promote and sell products in a fair, transparent and accurate manner;
  • tighter control on credit provision, including spending thresholds, beyond which suppliers must conduct a thorough credit assessment (credit assessment issues accounted for only 0.1% of all complaints received by the TIO during 2017-18);
  • upgraded arrangements to assist consumers in financial hardship; and
  • greater transparency around the relative customer service performance of suppliers.

Stanton was appreciative of feedback provided by the TIO, saying it had worked constructively with providers to address individual consumer circumstances.

“Active engagement by the Ombudsman and responsive action by suppliers are hallmarks of an effective co-regulatory system, which is bearing positive results in the telecommunications sector," he added.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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