Allens

Technology, Media & Telecommunications

Focus: Stronger telecommunications consumer protections

9 October 2012

In brief: The Australian Communications and Media Authority has registered a new Telecommunications Consumer Protections Code and has been granted new powers in relation to consumer protection matters. Partner Ian McGill (view CV) , Senior Associate Valeska Bloch and Lawyer Maryann Muggleston examine the key changes the Code introduces and the implications of these developments for telecommunications service providers.

How does it affect you?

  • The Telecommunications Consumer Protections Code (the Code) identifies outcomes for service providers to achieve in the areas of dealing with consumers, consumers sales, service and contracts (including advertising), billing, credit and debt management, changing suppliers, handling complaints and complying with the Code, as well as detailed actions for service providers to reach these outcomes. All service providers should engage with the outcomes and detailed actions the Code requires, review their current practices, and develop and implement the processes and systems necessary to achieve compliance.
  • The Code also establishes a new body, Communications Compliance, to, among other things, monitor compliance with the Code, including publishing lists of non-compliant providers and undertaking targeted investigations of allegedly non-compliant providers at the provider's expense.
  • The Code will be gradually implemented in stages over the next two years with key requirements kicking in as early as late October 2012.
  • The Australian Communications and Media Authority (the ACMA) has indicated that it will take a directive and tough approach to contraventions of the Code and, if satisfactory consumer outcomes are not forthcoming, is now empowered to make enforceable rules that apply to providers in relation to consumer protection issues.

Background

On 1 September 2012, the ACMA registered the Code (the Telecommunications Consumer Protections (TCP) Industry Code (C628:2012)).

The Code replaces the TCP Code (C628:2007) and TCP Industry Guideline (G631:2007) (the 2007 Code). It addresses many of the deficiencies in telco consumer protection regulation identified in a review of the 2007 Code, and the Reconnecting the Customer public inquiry, both of which were undertaken by the ACMA in 2010 and 2011.

Like the 2007 Code, the Code sets out community safeguards in relation to customer information, consumer contracts, billing, credit management, customer transfer, complaint handling and Code administration and compliance. However, unlike the 2007 Code, the Code is structured to identify outcomes to be achieved by service providers, as well as detailed actions to be taken in order to enable each of those outcomes. The simpler approach adopted in the Code has also eliminated the need for an interpretive guideline.

On 5 September 2012, the Minister for Broadband, Communications and the Digital Economy (the Minister) announced the provision of new powers for the ACMA to make service provider determinations on consumer protection matters. On 14 September 2012, the Telecommunications Amendment Regulation 2012 (the amendment Regulation) was placed on the register of legislative instruments and, while subject to disallowance, has effect from that date.

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Timeline for compliance

Although the Code was registered on 1 September 2012, its provisions will be implemented in stages over the next two years, to give service providers time to develop and implement the processes and systems necessary to achieve compliance.

The key dates are as follows:

1 September 2012: The Code was registered by the ACMA.
27 October 2012: Providers must disclose unit pricing when advertising the price of data plans in printed and online advertisements.
1 March 2013: Providers must offer to customers a 'Critical Information Summary'. Service providers must include in each bill containing an 'Included Value Plan' the total amount of the bill for each of the two previous billing periods.
1 April 2013: Providers must provide to the new communications compliance body, Communications Compliance, a 'Compliance Attestation', and large service providers must also provide a 'Statement of Independent Assessment'. Alternatively, providers must provide a 'Compliance Achievement Plan'.
1 September 2013: All providers must notify customers when they have used 50 per cent, 85 per cent and 100 per cent of their data expenditure allowance, and large providers must also notify customers when they have used the same amounts of their non-data expenditure allowance.
1 September 2014: Smaller providers must notify customers when they have used 50 per cent, 85 per cent and 100 per cent of their non-data expenditure allowance.

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Key changes

The Code introduces the following key provisions:

Advertising: Providers must include any important conditions and exclusions in advertising, and must not use terms such as 'unlimited', 'no exceptions', 'no exclusions' or the like unless there are genuinely no limitations or exclusions. Providers must prominently display unit pricing (including the cost, before any discount is applied, of making a two-minute call to an Australian number, sending a text message in Australia and downloading one megabyte of data within Australia) when advertising the price of data plans in printed and online advertisements.

Provision of information: Providers must make available to customers before any sale (and on the provider's website) a two-page 'Critical Information Summary', containing: a description of the service, unit pricing, minimum monthly charges, early termination charges, an estimate of the number of two-minute calls that can be made (where the plan is an included value plan), warnings regarding roaming costs, and other critical information.

Privacy: Providers must ensure that a customer's personal information is protected from unauthorised use and disclosure, and is dealt with by the provider according to privacy laws, including by maintaining robust procedures for the storage and restriction of access to the personal information in its possession.

Spend management tools: Providers must give 10 days' notice before direct debits occur. They must also provide notifications to customers that have reached 50 per cent, 80 per cent and 100 per cent of their expenditure allowance.

Credit management: Providers must complete an assessment of financial hardship within seven days of receiving information relevant to a request for assistance. Providers must also provide certain information to customers experiencing financial hardship.

Complaint handling: Providers must acknowledge a complaint immediately when the complaint is made in person or by telephone, or within two working days in other cases. Urgent complaints must be resolved within two working days, and other complaints must be resolved within three weeks. Providers must also keep adequate records of complaints.

Code compliance: Providers must provide a 'Customer Information Compliance Statement' (CICS) to the Communications Compliance annually and prepare and maintain a 'Compliance Plan' (CP) that outlines the initiatives of the provider that support compliance with the Code. Providers must also, annually, provide to the Communications Compliance a 'Compliance Attestation' (CA) endorsed by the CEO or a senior manager of the provider. Large providers must simultaneously provide to Communications Compliance a 'Statement of Independent Assessment' (SIA) that states an external qualified assessor has determined that the provider's CP has been prepared according to the Australian Standard on Compliance Programs AS 3806-2006. Where a provider is unable to submit to the Communications Compliance a CICS, CP, CA or SIA (if required) at the requisite times, the provider must submit to the Communications Compliance a 'Compliance Achievement Plan' (CAP) explaining how and when actions will be taken to comply with the relevant Code requirement. Providers must monitor and report regularly to the Communications Compliance on their progress under any CAP.

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The new Communications Compliance body

The Code establishes a new body, Communications Compliance, which will do the following:

  • monitor Code compliance;
  • establish memoranda of understanding with each of the Telecommunications Industry Ombudsman, the ACMA and the Australian Competition and Consumer Commission, including in relation to referrals and the sharing of information;
  • publish lists of providers that have and have not provided the Code compliance documents required under the Code;
  • publish guidance notes and case studies to assist providers in complying with the Code;
  • investigate the potential to create incentives to encourage providers to comply with the Code;
  • report to the ACMA; and
  • develop customer service metrics, benchmarking standards, and criteria for referral of compliance issues to the ACMA.

Communications Compliance also has the power to undertake a targeted investigation of the provider at the provider's expense, following receipt of information in relation to alleged non-compliance with the Code by the supplier. The result of such an investigation, or a failure to co-operate, may result in a referral of the provider to the ACMA.

Although the ACMA will retain prime responsibility for Code enforcement, Communications Compliance will share information about non-compliant providers with the ACMA. Nonetheless, Communications Compliance will not report a provider to the ACMA without first issuing warnings to the provider, and giving the provider an opportunity to provide the relevant compliance information to Communications Compliance.

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Enforcement

The Telecommunications Act 1997 (Cth) (the Act) empowers the ACMA to enforce the Code by various means, including:

  • directing persons that have contravened or are contravening the Code to comply with the Code (subject to the ACMA consulting with the Information Commissioner in the event that the contravention relates to a matter dealt with by the National Privacy Principles under the Privacy Act 1988 (Cth)). A person must comply with a direction to comply and, failure to do so could result in the issue of an infringement notice or, if the ACMA refers the matter to the Federal Court, an order for payment of a pecuniary penalty under the Act;
  • issuing formal warnings if a person contravenes the Code (subject to consultation with the Information Commissioner, if relevant);
  • investigating a contravention of the Code if it is desirable to do so, a complaint is made or the Minister requests the ACMA to investigate a contravention; and
  • accepting enforceable undertakings in relation to compliance with the Act (which includes compliance with an ACMA order to comply with the Code) and enforcing such undertakings in the Federal Court.

In his recent speech to the ACCAN conference, Chris Chapman, the Chairman and Chief Executive of the ACMA, indicated that in taking action against providers, the ACMA will be guided by the size of the provider, its compliance attitude, the severity of the breach and the impact of the provider's behaviour on consumer detriments.1

Mr Chapman also suggested that the ACMA's regulation of the Code will be 'responsive and proactive', and will result in the ACMA taking a 'much tougher and more directive stance' against providers, including approaching the Federal Court to enforce civil penalties if a 'top twenty' provider is in breach of an ACMA direction to comply with the Code; this is especially so in relation to the key elements of the Code, such as implementing the 'Critical Information Summaries', usage notification mechanisms or reforming complaint handling processes. Finally, Mr Chapman also highlighted the ACMA's plans to undertake not less than 100 audits of providers' compliance with key codes during the remainder of this financial year, as well as its future focus on particular issues under the Code; namely, complaints handling, advertising, credit management and the roll out of 'Critical Information Summaries'.2

The amendment Regulation supplements the ACMA's powers to enforce the Code. Under the amendment Regulation, the ACMA may make a service provider determination setting out enforceable rules that apply to providers in relation to a customer's interests as regards the supply of certain services (namely, a standard telephone service, a public mobile telecommunications service or a carriage service that enables customers to access the internet). For example, the amendment Regulation notes that the ACMA may make rules on various consumer issues including in relation to:

  • advertising, marketing or promoting services;
  • notifying customers about the types of available services and the terms on which they are available;
  • enabling a customer to monitor their charges;
  • disconnecting a customer's services; or
  • dealing with complaints.

While the Minister has indicated that he expects the ACMA to engage with the industry under the Code before issuing service provider determinations, if satisfactory consumer outcomes are not forthcoming, the ACMA is now empowered to rapidly put in place enforceable rules.3

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Next steps

As noted above, the Code, while registered, will be implemented in stages over the next 24 months. However, service providers should immediately engage with the detailed mechanics of the Code, to develop and implement the processes and systems necessary to achieve compliance.

Footnotes
  1. Speech by Chris Chapman, The Telecommunications Consumer Protections Code – delivering for consumers (5 September 2012), available on the ACMA website, page 7.
  2. Ibid. page 6.
  3. Speech by Senator Conroy, ACANN National Conference (5 September 2012), available on the Minister's website.

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