Financial hardship

Complaints we receive involving financial hardship include claims a telco:

has not made its financial hardship policy easy to access, or actively pointed it out to consumers in appropriate circumstances
has not assessed a consumer’s eligibility for financial hardship on request, or when aware that the consumer could be experiencing financial hardship
has refused to negotiate a reasonable payment arrangement
will not renegotiate an existing payment arrangement after the consumer’s financial circumstances have changed.

In this position statement, financial hardship means a situation when a consumer is willing to pay a debt but does not currently have the financial capacity to do so according to their contractual obligations. Financial hardship can be a short or long term situation.

Credit management means the process by which a telco:

helps its consumers to manage their spend on telecommunications services
manages any credit risk to the telco, and
collects outstanding charges from its consumers and former consumers.

This guidance applies only if the consumer accepts liability for the debt causing the financial hardship. If the consumer disputes the debt, other guidance may be relevant instead, for example Pre-sale information or conduct, or Charges -in detail.

Laws, codes, and guidelines

The following laws, codes, and guidelines are relevant to financial hardship.

Our approach

When we deal with complaints involving financial hardship we consider the law, good industry practice, and fairness in all the circumstances.

The law

The Telecommunications (Financial Hardship) Standard 2024 outlines telcos' obligations to identify consumers experiencing financial hardship, and steps they must take to offer assistance. The Standard broadens the definition of financial hardship, and requires telcos to establish and promote clearly accessible financial hardship policies.

The Credit Reporting Code states that a telco must not disclose an overdue payment in relation to consumer credit to a credit reporting body as default information if the individual has made a hardship request, and either:

the telco is in the process of deciding the individual’s hardship request, including if the telco is waiting upon information from the individual for the purposes of making that decision, or
if the telco decides to refuse the individual’s hardship request – until at least 14 days after the telco has notified the individual of this decision.

This rule does not apply if the hardship request is made on a basis that the telco reasonably believes is materially the same as the basis on which a previous hardship request was made, and the previous hardship request was made during the previous four months.

The Telecommunications (Consumer Complaints Handling) Industry Standard says:

a complaint made by a consumer who has applied for or been accepted as being in financial hardship is urgent if the subject matter of the complaint could directly contribute to or aggravate the financial hardship
a telco must help consumers suffering financial hardship formulate, lodge, and progress a complaint.

Good industry practice

Chapters 6 and 7 of the Telecommunications Consumer Protections Code include the following rules for dealing with financial hardship.

A telco must have information available about its processes to help consumers who are having trouble paying their bills.

A telco must have a financial hardship policy and make sure it is easy for consumers to find and access. The policy must be readily accessible on the telco’s website. The telco must also provide:

relevant contact details of staff with whom the consumer may discuss the financial hardship policy
where the consumer can find contact details of community financial counsellors or consumer advocates who deal with financial difficulty matters.

A telco must tell a consumer about its financial hardship policy:

at the time of, or before, issuing the first bill
when issuing a reminder notice
when notifying the consumer about restriction, suspension, or disconnection of the consumer’s service
when sending a disconnection notice.

See our page Restricting or disconnecting a service for credit management reasons for more information about how a telco can restrict or disconnect a service.

A telco must give a summary to a consumer of how the telco’s financial hardship policy can help them:

on request
when the consumer indicates to the telco they are experiencing financial hardship
if the telco considers the consumer may be eligible for the policy.

Where possible a telco must provide flexible repayment options to meet a consumer’s individual circumstances. A telco must review financial hardship arrangements if the consumer notifies the telco that their circumstances have changed.

A telco must suspend credit management action while an arrangement under a financial hardship policy is being discussed or is in place, unless:

the consumer agrees otherwise
the consumer breaches the arrangement, or
the telco decides it is reasonable to do so given the circumstances, for example to prevent a further increase in the debt owed,

and the telco is unable to contact the consumer using reasonable steps. A telco must not sell a debt during a financial hardship arrangement. See our guidance Collecting overdue charges for more information about suspending credit management.

TIO view

We encourage consumers to repay amounts they consider affordable while their financial hardship assessment is in progress.

A telco should make a financial hardship arrangement with the intention of helping the consumer pay their bills. For example, a telco should not apply late payment fees when a financial hardship arrangement is being discussed or is in place.

A telco should attempt, wherever possible, to offer the consumer basic access to their telecommunications service congruent with the consumer’s ability to pay, while a hardship arrangement is being discussed or in place. This may involve reconnecting a disconnected service. A consumer should generally not be charged for this reconnection. What is basic access will depend on the consumer’s circumstances. For example, it will not be appropriate for a service to be supplied that the consumer cannot afford, and could make the situation of hardship worse.

During a financial hardship arrangement a telco should keep a consumer informed of their obligations under the arrangement.

The TIO Terms of Reference say we can make a temporary ruling about a telco’s credit management action while we are handling a complaint. The telco must comply with this temporary ruling. For example, we can make a temporary ruling telling the telco to reconnect a service, remove a default listing of the consumer or not pursue a debt.

Dealing with a dispute

To assess a complaint involving financial hardship we may ask for information or documents from the consumer and telco. This may include asking:

What are the consumer’s financial circumstances?
What other debts and commitments does the consumer have?
What has been the consumer’s payment history?
Did the consumer ask for a financial hardship arrangement, or provide information that was an indicator of financial hardship?
How did the telco assess the consumer’s circumstances, and what financial hardship arrangement and access to services was offered?
When a financial hardship arrangement was in place, did the consumer meet the arrangement, and if not what actions were taken?

Outcomes

When, in our view, a telco did not appropriately:

identify from available information that a consumer is in financial hardship
offer a financial hardship arrangement and access to services based on the consumer’s circumstances
review the suitability of a financial hardship arrangement, or
suspend credit management while a financial hardship arrangement was in place or being discussed,

outcomes may include:

providing a copy of the financial hardship policy
assessing the consumer as eligible for a financial hardship arrangement
arranging an appropriate financial hardship arrangement, which may include extended repayment options and minimising further charges
waiving some or all of the debt as part of an appropriate financial hardship arrangement
reconnecting the service if previously disconnected, with or without restrictions
if technically possible, restricting the consumer’s service to prevent the consumer incurring charges they cannot afford, or
suspending credit management, including dealing with a debt that has been sold or assigned to a third party, and waiving late payment fees.

Effective date: 1 January 2022

This page provides broad guidance on the law, good industry practice, and what the TIO may consider to be fair and reasonable in general circumstances. It is not a full statement of the law or good industry practice. The TIO considers each matter brought to it on its own particular merits.