Financial Counselling Australia’s comments follows release of its report and survey - Telcos and Financial Hardship: Feedback from the Frontline.
Commenting on its own report, which has two parts - a survey of financial counsellors and desk top research on other relevant studies and data - Financial Counselling Australia says every financial counsellor who took part in the survey said they have more than 50% of their clients struggling to pay their telco bills.
According to Financial Counselling Australia, 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
The report reveals that 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 - with Telstra scoring 6.2, Optus 5.6 and TPG/Vodafone 4.4.
Financial Counselling Australia described these ratings as poor.
As reported by iTWire earlier today, telecoms industry peak body Communications Alliance says that telcos want more Federal Government action on ‘improving’ funding of financial counselling - with CA CEO John Stanton noting that financial counselling is a vital service for many Australians, and the FCA report shows that “financial counsellors have had some mixed experiences when working with telcos on behalf of their clients”.
In its report, Financial Counselling Australia says that nearly a quarter of Australia’s 950 financial counsellors took part in its survey.
“This was a remarkable result, given the survey was only open for the three days immediately before Easter,” the FCA noted.
“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,” the FCA said in a statement.
CEO of Financial Counselling Australia, Fiona Guthrie AM said that “one of the major drivers of people being unable to pay their telco bills is mis-selling,” and “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,” Guthrie said.
“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,” Guthrie concluded.