Telco customers to set their own spending limits

New moves designed to protect consumers from suspect telco companies have the potential to transform the industry, according to the Australian Communications Consumer Action Network.

As part of a major industry overhaul, the Australian Communications and Media Authority has released a report recommending that misleading advertising terms, such as “cap” and “unlimited”, be banned to avoid massive bill blowouts.

It also recommends the introduction of monthly spending limits and simpler plans. Other recommendations include:

• Improved advertising practices, including supermarket-style pricing to allow for comparisons.
• Budgets tools for consumers to manage their costs, particularly by being able to monitor the accumulation of charges during a billing period.
• The introduction of transparent customer care performance reporting.
• Improved internal complaints handling.

The report was part of a year-long inquiry, prompted by a surge in complaints to the Telecommunications Industry Ombudsman, which reached 210,000 last year.

According to ACMA chairman Chris Chapman, telco customers are “long suffering and very frustrated” due to confusing contracts and shock bills.

Under the changes, consumers could set their own limits for phone bills, with telcos forced to alert consumers when they are approaching their limit.

Telcos will have an opportunity to implement the requirements of the draft report. If they do not, they will face new standards and regulations.

ACCAN chief executive Teresa Corbin says the report marks the end of self-regulation for the industry, hailing it as a victory for consumers.

“The current self-regulatory regime and the market has failed… Telco customers have had enough and the ACMA, in recognising this, has signalled a major shift in their approach to regulation,” Corbin says.

“If the proposed recommendations are implemented, we might finally have a telco market that is fair for consumers. This gives consumers hope that bill shock will be a thing of the past.”

Earlier this year, the Australian Competition and Consumer Commission rejected a proposal by electricity retailers to introduce self-regulatory mechanisms into the industry.

The ACCC was asked for its approval to set up an independent body to accredit doorknockers, field complaints and administer a code of conduct.

The move came after Victoria’s Energy and Water Ombudsman Fiona McLeod revealed that complaints about marketing-related issues rose 33% in the previous financial year, describing the issue as a “mounting concern for consumers”.

But the ACCC issued a draft decision knocking back the proposed code of practice, saying it was “unlikely to produce material benefit for consumers”.

ACCC chairman Graeme Samuel said in a statement that while the regulator supports efforts by the energy industry to improve outcomes for customers, it believes the proposed code is “unlikely to deliver on this objective”.