Consumer Codes, Compliance& Consultation

Kathleen Silleri Consumer Interests Section

12 September 2006

SummaryCodes

• Code development & registration• Consumer input to codes • Types of codes• What do the Codes require of industry • How do they work in practice

Compliance

• ACMA’s approach to code compliance• How is compliance with codes assessed• Examples of compliant and non-compliant practices• Compliance and enforcement activity

Consultation

• Overview of consultation practices• Consultation on codes• Specific consultation exercises• ACMA’s Consumer Consultative Forum

Overview of Consumer Codes

• The Telecommunications Act promotes the concept of industry self-regulation (or co-regulation).

• This involves industry self-regulation which is achieved through codes of practice initiated and developed by industry.

• A number of consumer codes were specifically identified in the legislation as examples of codes that should be developed.

Code development

• Industry codes can be developed by industry bodies and associations on matters which relate to a broadcasting, internet or telecommunications activity.

• Under the Telecommunications Act, ACMA may request the development of a code for registration where it sees a need for a code.

Code development (cont)

• If a code is not developed or does not meet the registration criteria, ACMA may develop an industry standard.

• Compliance with an industry standard is mandatory.• ACMA must develop standards relating to Australian

television content and children’s television content.

Code registration

• Consideration of applications for code registration requires ACMA to:– ensure that certain processes have been followed in code

development; and

– assess whether the code provides appropriate community safeguards.

Consumer input into telecommunications code development• Consumer representatives usually participate in the

development of codes which affect telecommunications consumers.

• Under recent changes to legislation, industry bodies can apply for funding from ACMA for code development processes where consumers are adequately represented.

Key stakeholders - telecommunications

• Industry representatives – incumbents and emerging participants

• Industry bodies (e.g. Australian Communications Industry Forum, Internet Industry Association)

• Consumer representatives - representatives of vulnerable (disabled, low income etc) and mainstream consumers

• Regulators (e.g. Australian Competition and Consumer Commission, Telecommunications Industry Ombudsman, Office of the Privacy Commissioner)

Types of codes -Telecommunications

• Currently 26 telecommunications codes registered (24 by the Australian Communications Industry Forum, 1 by the Australian Direct Marketing Association, 1 by the Cabling Industry Committee).

• Codes may be network (end-to-end network performance, unconditioned local loop network deployment rules), operational (portability, pre-selection) or consumer (credit management, consumer contracts).

• A register of these codes is on the ACMA web site at www.acma.gov.au>Industry>Codes>Register of Codes.

Consumer Codes

• Billing• Calling Number Display• Complaint Handling• Consumer Contracts• Customer Transfer• Credit Management• Prices, Terms and Conditions

What do the codes require of Industry participants?

Billing Code

Industry participants must ensure that -• Customers are provided with sufficient information to

enable them to verify the accuracy of billed charges• Bills are easy to read and understand• Charges are billed and bills are issued in a timely

manner• Customer have enhanced understanding of direct

debiting arrangements• Pre-paid customers are able to verify their charges

Calling Number Display Code

Industry participants must ensure that they – • Provide privacy protections in the supply of calling

number display (CND) services• Adopt procedures to allow callers using the service to

enable of block CND freely without charge• Take reasonable steps to provide customers with

sufficient information to allow them to utilise call blocking features of the service

• Maintain ongoing awareness activity with customers in relation to CND and privacy

Complaint Handling Code

This code requires that industry participants must – • Promote recognition and protection of customers’

rights• Provide an efficient, fair and accessible mechanism

for handling customer complaints• Ensure customers receive information regarding

complaint handling procedures

Consumer Contracts CodeThe code requires that industry participants must ensure that their

contracts do not –• Include terms that allow the supplier to end the contract, or fail

to do what they promised without refunding money the customer has already paid or while still requiring the customer to pay the full contract price

• require the customer to pay the supplier early termination fees or unbilled charges within a reasonable period following the termination of the contract

• Include terms that automatically lock a customer into a new fixed length contract when their current contract ends

• Include terms that limit customers’ rights to make a complaint against the supplier

Customer Transfer Code

This code requires that industry participants ensure that-

• Sales representatives are appropriately trained• Steps are followed to identify the authorised customer• An appropriate verification process is in place and

followed• Customers are duly notified of the transfer

Credit Management Code

This code requires providers to ensure –

Customers are clearly informed of their credit management rights and options

Industry consistency in credit management processes applying to consumers

Debt collection agency adherence to accepted professional and ethical standards for the collection of debts

That each provider has a financial hardship policy

Customer information on prices, terms & conditions codeThis code requires industry participants to ensure that

each provider - • Better educate customers about the industry and the

products on offer• Provide safeguards against the confusion and

deception of customers• Improve the fairness and accuracy of information

provided • Each of the above will enable customers to make

informed purchasing decisions.

How do the codes work in practice?

Example of non-compliant behaviour

• When it comes to contracts, the information about terms and conditions does not include:– Minimum term of contract

– Minimum period of notice for either party to terminate contract

– Events that give either party the right to terminate the contract

– The charge, and method for working out the charge, for terminating the contract

– terms that automatically lock a customer into a new fixed length contract when their current contract ends; and

– terms that limit customers’ rights to make a complaint against the supplier.

“…Billing Dispute: If you have a problem with or wish to dispute any direct debit or credit card charge or account charge please contact us in the first instance in the manner described above so that our staff can help to resolve the problem at no charge to you.Our Customer Service Department will endeavour to contact you within one calendar month. If the problem or dispute still cannot be resolved or after one calendar month, you may be entitled to make a claim. Failure to let us resolve any dispute first or to allow that one calendar month to process your dispute, or lodging a complaint with any third party before we have the one month to resolve your dispute, will incur a $200 fee plus any other fees due as stated above and in our Terms and Conditions.”

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But what’s in the fine print?

“…Anything within this 2 year fixed contract may be varied, with 14 days notice. Notice will be issued in writing to the consumer within 14 days prior to the date on which the variation is intended to take effect. The consumer has the right to terminate the contract within 14 days of the date of notification referred to above incurring a $100 administration fee.”

Example of compliant behaviour• Information about billing should include details of:

– Times when the bill will be issued– Charges for particular billing options – How bills are issued, ie the form– Ways of paying– Any policies in relation to billing– Penalties for late payments

…How often will we bill you?We will bill you on a monthly basis (either in advance or in arrears).What will appear on your bill?We will try to include on your bill all charges for the relevant billing period. Where this is not possible we may include

these unbilled charges in a later bill(s).We may use a billing agent to bill youWe may bill you using a billing agent (which may be another company within our group).What types of payment methods may you use?You may pay by one of the payment methods as set out in the payment notification, on the back of the bill or on our

websites. If your payment is not honoured (for example, in the case of insufficient funds for direct debit or credit card payment, or a dishonoured cheque), we may charge you a fee.

When must you pay your bill?You must pay the entire amount billed by the due date specified in the payment notification, bill or as otherwise

notified.What happens if you do not pay your bill by the due date?If you do not pay your bill by the date the payment is due, we may:• charge you a late fee. Any late fee is payable until all outstanding amounts are paid,• suspend or cancel the service, in accordance with clause 11 or 12 as relevant or the relevant service description.

If we suspend or cancel the service, we may charge you a suspension fee, cancellation fee and/or reconnection or reactivation fee. Reconnection or reactivation of the service is subject to payment of the reconnection or reactivation fee,

• engage a mercantile agent to recover the money you owe us. If we engage a mercantile agent, we may charge you a recovery fee,

• institute legal proceedings against you to recover the money you owe us. If we institute legal proceedings, we may seek to recover our legal costs, and

• on-sell any unpaid amounts to a third party. If we do this, any outstanding amounts will be payable to that third party.

What happens if you have overpaid as a result of a billing error?If you have overpaid as a result of a billing error your account will be credited with the amount you have overpaidSuspension of payment obligationsWhere your complaint is about a fee or charge for the use of the service, we may suspend payment obligations, for

that fee or charge only, until the complaint has been investigated and resolved. All other fees and charges that are not in dispute are due and payable.

ACMA approach to code compliance

• Aims to enhance the effectiveness of self-regulatory consumer codes and the quality of the consumer experience in telecommunications.

• Is assisted by an active and credible program of compliance measures, both proactive and reactive, supported by enforcement action where necessary.

ACMA’s regulatory approach:• Encourages self-regulation• Provides a range of compliance measures

How is compliance with codes assessed?

Is the issue systemic?

• The focus of ACMA’s compliance strategy is on systemic breaches, ie those that affect or have the potential to affect a class of customer.

• An issue may involve a single provider or a particular sector of the industry.

• The Telecommunications Industry Ombudsman manages individual code breaches and refers systemic ones to ACMA.

TIOThe Telecommunications Industry Ombudsman deals with individual codes complaints.

• It is a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia who have a complaint about their telephone or internet service.

• It is an “office of last resort”. Consumers should contact their service provider in the first instance to resolve issues.

• The TIO refers systemic breaches to ACMA.

• ACMA takes advantage of a graduated use of compliance measures using the minimum power or intervention necessary to achieve the desired result.

• Most compliance activity is relatively informal, with a clear focus on education and encouraging industry self-regulation.

• The use of more formal measures, such as the use of our legislative powers is limited. We believe this is due to the effective regulatory approach we have taken to encourage compliance that is resulting in less matters requiring escalation and intervention.

Compliance Measures

Compliance and Enforcement ActivitiesACMA starts by undertaking a preliminary enquiry, to investigating a matter and then may need to escalate it taking more formal measures.

Informal• Provide Information and Encouragement – positive reporting• Co-operation with industryFormal• Warning• Direction• Enforceable Undertaking

Ultimately, we want industry to comply, and we will act promptly to minimise consumer detriment.

ACMA responds to issues on a case by case basis.

• We take the following factors into account:

– How serious is the systemic issue?

• number of consumers affected

• level of consumer detriment

• extent to which market forces are likely to correct the issue

• extent to which the breach is likely to effect competing industry participants

• the supplier’s code compliance philosophy and strategy, including responsiveness to ACMA’s approaches

– Also consider:

• the extent to which competition is an effective deterrent to non-compliant behaviour; and

• whether ACMA is the most effective body to handle an issue

Consultation

• Consultation on Codes• Specific consultation exercises• ACMA’s Consumer Consultative Forum

Consultation on Codes

• Industry bodies should undertake consultation during the development of a code

• Industry bodies must undertake consultation with the ACCC, the TIO and at least one consumer representative organisation

• In the case of privacy codes, the Privacy Commissioner must be consulted

• Codes are also subject to a 30 day public consultation period

Specific Consultation Exercises

• ACMA conducts public consultation exercise on most new initiatives or changes to procedures or practice which may impact on the community

• ACMA will conduct targeted consultation with relevant stakeholders on any initiative of change which may impact those stakeholders

• Generally a 30 day consultation period• Comments received are taken into account when the

Authority makes decisions

Consumer Consultative Forum

• ACMA is formally required to establish a Consumer Consultative Forum under Section 59 of the ACMA Act 2005

• The CCF is to assist ACMA perform its functions in relation to matters affecting consumers

• ACMA is currently in the process of establishing its CCF

• The CCF will provide an opportunity for consumer representatives, industry representatives and regulators to actively engage on consumer issues.

Questions?

Contact details

Kathleen.silleri@acma.gov.au

61 3 9963 6926