CASE STUDY:

Financial hardship and payment plans

The complaint

Janet contacted us about a debt of almost $3 000 on her mobile telephone service. She was unable to pay this all at once because she was unemployed. She had seen a financial counsellor and worked out that the most she could pay was $15 a fortnight. Her provider had rejected this offer because the debt would take several years to pay off. It said Janet had made no payments towards the debt for seven months and it had lodged a default against her name with a credit reporting bureau.

TIO response

We noted that it appeared as though the provider had lodged a credit default when Janet and her financial counsellor were in the process of attempting to make a payment arrangement. The provider had also added a significant debt recovery fee to the charges. We were concerned that this had been done despite Janet telling the company of her financial hardship.

We asked the provider to consider whether it had complied with the industry code on credit management and our position statements on hardship and payment difficulties and unlimited credit/financial over commitment. The industry code and position statements outline the need for telephone companies to have a financial hardship policy and assist consumers who are experiencing financial hardship.

The outcome

The telephone company agreed to accept Janet’s payment arrangement of $15 per fortnight conditional on this being revisited every six months to determine whether her financial circumstances had changed. The company also agreed to remove the default listing and withdraw the debt collection fee.

We formed the view that the resolution represented a fair and reasonable outcome to Janet’s complaint. Janet was happy with this result.

Lessons learnt

Telephone companies are obliged to have a financial hardship policy and to offer assistance to consumers experiencing financial hardship.

Consumers are expected to take steps to reduce their exposure to high levels of debt by minimising their usage and getting a bar placed on their service. They should also continue to make regular payments of what they can afford and keep their telephone company informed about their circumstances.

> NEXT: Elderly consumers and provisioning delay