Relief in sight for Aussies struggling to pay phone bills

Telecommunications companies will be required to offer more help to Australians suffering from financial hardship who are finding it difficult to pay their mobile or home internet bills, under new rules announced by the federal government.

From March 29 the new Industry Standard on Financial Hardship will broaden the scope of what is considered financial hardship, giving more customers access to support.

Companies will also be required to offer their customers at least six different assistance options (such as payment plans or deferred payments), and the bar will be raised before a telco can switch off someone's mobile or internet service.

"In 2024, staying connected is an essential part of everyday life. It's how Australians keep in touch with loved ones, run businesses, and engage with government," says federal communications minister, Michelle Rowland.

"That's why it is critical telcos do all they can to keep customers connected when they are experiencing difficulties paying their bills. This new industry standard will mean Australian consumers and small businesses are better supported by telcos when they need it most."

Why are the new hardship rules necessary?

According to a report published last year by the Australian Communications and Media Authority (ACMA), which will administer the new rules, 2.4 million people either experienced financial difficulty or had concerns related to their telco bills in the 12 months to May 2023.

Despite this, the report noted that, as of June 2022, just 4388 residential customers had financial hardship arrangements in place with their respective telco companies.

Elsa Markula, chief executive of the Australian Retail Credit Association, says that the ACMA's research underlines why the new rules needed to be introduced.

"There's a huge disconnect, so what these changes are really looking to do is to ensure that customers who are experiencing financial difficulty have readily available options and that telcos are proactively identifying customers at risk of financial difficulty.

"If somebody has missed two consecutive payments, or is over $200 in arrears, the telco is going to be required to reach out and actually offer them support.

"That's going to make a huge difference and I think we'll see far more customers being put in arrangements that help them get back on their feet rather than suffering in silence."

Why is there a gap in credit reporting?

Markula is also hopeful that a government review into credit reporting laws will recognise the need for telcos to be further integrated into the credit reporting system.

Currently, she says that telcos have little interaction with the system, meaning that people experiencing financial hardship might not be getting the kind of support they could be across the board.

"For those who are at risk of hardship it's really important that there's a level of visibility because they might have a car loan, a credit card or a home loan which they're also trying to juggle on top of their telco account.

"So I think a credit reporting system where you've got a more holistic insight into what's going on makes it more likely that they [providers] can arrange assistance that's actually suitable for someone.

"We heard about instances where people have not reached out for assistance and, because of that, have cut back on things like groceries. We want to avoid that happening and I think the credit reporting system and the data within it can assist people before that happens."

How to access financial hardship support

Whether it's a mortgage, credit card, electricity bill or internet plan, ASIC Moneysmart recommends that anyone struggling financially and finding it difficult to keep up with their loan repayments or bills take action by reaching out to their bank, energy provider or telco.

In fact, if a customer asks for help their provider must consider them for hardship assistance like setting up a payment plan or temporarily reducing their payments.

Anyone in need of additional financial support can also speak with a financial counsellor for free by calling the National Debt Helpline on 1800 007 007 or visiting their website. Or head over to ASIC Moneysmart's financial counselling portal to search for financial counsellors by location.

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