1. Money Troubles – Dealing with Phones, Water, Gas and Electricity Debt 23 March 2006 Presented by the Consumer Law Centre Victoria Ltd

2. Access to essential services training session This session will provide practical information on how to deal with debts in relation to phones, gas, electricity and water for financially and socially disadvantaged people. The session is structured as follows: 1.Introduction to the CLCV and access to essential services; 2.Regulatory framework; 3. Connection; 4. Credit reporting and ‘bad credit’; 5. Payment difficulties; 6.Concessions and Utility Relief Grants; 7. Disconnection; and 8.Disputes and where to go for help.

3. 1. About the CLCV The CLCV is one of Australia's leading consumer advocacy and public interest organisations, undertaking research, policy development, lobbying, advocacy, law reform and education activities. The CLCV's purpose is to protect and promote the interests of low- income and vulnerable or disadvantaged consumers. The CLCV is currently advocating the consumer interest on a range of issues, including: -fair trading and access to justice; banking and other financial services; telecommunications; pay day lending and other forms of exploitative credit; public transport; insurance; and utilities (water, gas and electricity).

4. 1. An introduction - barriers to access to essential services Water, electricity, phones and gas are essential services – they are vital for health and well-being. Consumers may face various difficulties in accessing these essential services on a fair, equitable and affordable basis. Barriers include: -Lack of providers/competition; -Lack of access to phone, electricity, water or reticulated gas services; -Lack of enforcement of protections under Retail Codes; -Poor selling practices; and -Financial hardship.

5. 1. Customers in financial hardship People in financial hardship may face other specific barriers when trying to access essential services. They may be faced with: -Disconnection of electricity, phone, and gas services; -Restriction of fixed line phone and / or water services; -Refundable advances/security bonds (security against defaults on a bill); -Payment difficulties generally; -Over-billing or under-billing (if estimated); - Restriction of phone services; or -Shortened collection cycles.

6. 2. The regulatory framework – electricity and gas All electricity and gas retailers and distributors must have a licence to sell or distribute in Victoria. Licences are granted by the Victorian Essential Services Commission (ESC). Licences require that companies must: -Be a member of an approved EDR scheme (EWOV is the only approved scheme); -Comply with industry codes (eg Energy Retail Code, which provide a safety net of minimum customer service standards); -Comply with other guidelines (eg Credit Assessment Guideline, which governs how retailers can use credit referencing agencies to require refundable advances); and -Regularly report to the ESC on performance measures.

7. 2. The regulatory framework – water The ESC has implemented a new water Customer Service Code that applies to both the metropolitan and regional urban water businesses from 1 July 2005. The Code imposes minimum obligations similar to those imposed on the electricity and gas retailers. All water businesses have implemented new Customer Charters, based on the rights under the Code. The Customer Charters are available on water businesses’ websites.

8. 2. The regulatory framework – phones Fixed line and mobile phones are regulated by the Australian Communications and Media Authority (ACMA). ACMA monitors and manages the performance of service providers according to the Customer Service Guarantee, which sets minimum standards and provides residential and small business users with compensation when standards are not met. The CSG specifies timeframes for the connection of specified services, the repair of faults and the attendance of appointments by service providers. Customers are entitled to compensation if these timeframes are not met. To claim compensation, contact your supplier.

9. 2. The regulatory framework – phones (2) Suppliers must also comply with various Australian Communication Industry Forum (ACIF) codes. The code that we will be utilising most today is the Credit Management Industry Code ACIF C541:2006 ( the Credit Management Code) which sets minimum industry standards on credit management practices and attempts to foster good industry practice. ACMA registered the code on 13 April 2006 and it can now be enforced against all carriers and carriage service providers, which includes internet service providers.

10. 3. Connection rights– electricity and gas Reminder: Different types of customers have different rights/responsibilities Caravan park residents and rooming house residents have different rights and responsibilities, as compared with tenants, and people living in their own homes. Residents may not have a separate meter and/or may be supplied by the property owner. Man of the rights that we discuss only apply to customers of licensed suppliers. The Residential Tenancies Act 1997 sets out the rights and obligations of caravan park residents and rooming house residents. The basic principles are: - a resident can only be charged a separate amount for utilities if their residence is separately metered; and - the owner cannot charge the resident more than the supplier charged the owner. Contact the Tenant’s Union on (03) 9416 2577 or via their website at www.tuv.org.au for more information.www.tuv.org.au

11. 3. Connection rights – electricity and gas The 3 principal electricity and gas retailers (AGL, Origin Energy and TRU energy) must connect all customers in their local area to electricity or gas (for gas, so long as the property is connected to the reticulated gas system). This obligation to supply and the terms of this arrangement are called the Standing Offer Contract or Tariff. However, retailers are not obligated to continue to supply energy if the customer does not pay their bills or does not pay a legally requested refundable advance (discussed further later). Customers can agree to enter into a Market Contract but only if they give “explicit informed consent”.

12. 3. Connection rights – water Under the new water Customer Service Code, all metropolitan water retailers and the RUWAs are required to service all connected properties in their geographical area.

13. 3. Connection rights – fixed line phones Telstra, as the current universal service provider, has an obligation to provide a standard telephone service, that is a basic fixed telephone used to speak with people in other locations, to every home and business, under the Universal Service Obligation (USO), which is established by the Telecommunications (Consumer Protection and Service Standards Act (1999). Telephone companies are required to provide certain features with a standard telephone service. These features include access to: -local, national and international calls -24 hour access to the emergency call service number -operator assisted services; -directory assistance; and -itemised billing, including itemised local calls on request.

14. 3. Connection rights – fixed line phones (2) Only the supply of one standard telephone service to a customer's location is required under the USO. Customers’ rights under the USO do not extend to mobile services, the Internet, or other enhanced telecommunications services. Under the Customer Service Guideline, which is available on the ACIF website at www.acif.org.au, service providers must comply with timeframes as to connection of specified services, the repair of faults and the attendance of appointments by service providers.www.acif.org.au Connection – service providers must comply with requests by a customer to connect within two working days. If the phone service is not connected in two working days, the customer can claim $12 per day, and $40 per day after the first 5 working days of delay.

15. 4. Credit reporting and ‘bad credit’ – electricity and gas If your client has a poor credit history, a retailer of electricity and gas can request a “refundable advance”, which is an amount that a retailer asks a customer to pay prior to issuing a bill (security for default). Electricity and gas retailers can only ask a customer to pay a refundable advance in certain circumstances, for example: -The customer is new and does not provide ID; -The customer owes an electricity or gas debt (over a certain amount) from a previous address; or -The retailer decides that the customer has an “unsatisfactory credit rating” (but in this case they must first offer the customer an instalment plan).

16. 4. Credit reporting and ‘bad credit’– electricity and gas (2) The ESC Guidelines on Credit Assessment explain what defaults can and cannot be taken into account by retailers in assessing whether a customer has an “unsatisfactory credit rating”. Energy retailers may not demand a refundable advance of more than 37.5% of the amount the customer was billed for electricity or gas over the last 12 months (or, if this is not known, 37.5% of the average amount the retailer billed its residential customers over the last 12 months). If the customer does not pay the refundable advance, the retailer may disconnect supply. Refundable advances are not commonly requested.

17. 4. Credit reporting and ‘bad credit’– fixed line phones Fixed line phones Both Telstra and Optus have a policy not to request security bonds. However, the Credit Management code allows security bonds to be required in certain circumstances. The supplier must: (a) base the requirement on a credit assessment of the customer; (b) inform the customer in writing that the security bond can be used to offset any undisputed amount owed by the customer; (c) advise the customer on receipt of the security bond; and (d) repay the security bond on completion of the terms of the security bond arrangements or when the services are ceased.

18. 4. Credit reporting and ‘bad credit’– mobile phones Under the Credit Management code, a supplier must either: -undertake a credit assessment of a customer, when determining whether to supply a service OR -supply a service which limits the customer’s expenditure or usage via a hard cap, a prepaid service, barring international or premium service calls, or any other measure that limits expenditure. When undertaking a credit assessment of a customer, the supplier may consider: the customer’s payment history, employment, income and residential history. The supplier may also undertake a credit check with a reporting agency or an other check with a third party.

19. 4. Credit reporting and ‘bad credit’– mobile phones (2) If a supplier refuses to supply a service and the decision is based on information from a credit reporting agency, the supplier must, under the Credit Management code, write to the customer within 7 days stating: -that the application for service has been refused; -that refusal was based on information that a credit reporting agency has given to the supplier; -the name and address of the credit reporting agency; and -the customer’s right to obtain access to their credit information file.

20. 4. Credit reporting and ‘bad credit’– dual fuel For customers on dual fuel contracts (that is a customer who is charged for electricity and gas on the same bill by the same supplier) the maximum refundable advance amount is reduced to 25% of the annual amount billed in the preceding 12 months. 4. Credit reporting and ‘bad credit’– water The water Customer Service Code provides that water businesses must not charge security deposits (unless otherwise approved by the ESC).

21. 4. Credit reporting and ‘bad credit’ – your credit report Credit reports include the following information: personal details (name, current and previous addresses, gender, driver licence number); records of credit applications made in the past five years; records of current loans; accounts where the person has been in default for more than 60 days and the creditor has demanded payment; court judgments; dishonoured cheques; paid defaults; clearout listings. (These occur when the lender was unsuccessful in trying to contact the person and makes a decision that they were not intending to pay the debt. This is common for utility debts.); and bankruptcy orders, including debt agreements.

22. 4. Credit reporting and ‘bad credit’ – getting a copy of your credit report Getting a free copy of your credit report from Baycorp Write a letter to Baycorp stating your: full name, date of birth, driver licence number, current address and, if applicable your previous address (if you have moved in the last 5 years), a daytime telephone number. If you are writing on a client’s behalf, include an authority from your client. Send the letter to Baycorp at: Baycorp Public Enquiries PO Box 964 North Sydney NSW 2059, or Fax the letter to Baycorp at: 02 9951 7880

23. 4. Credit reporting and ‘bad credit’ – getting a copy of your credit report Getting a free copy of your credit report from Dun & Bradstreet within 10 working days Telephone Dun & Bradstreet on 13 23 33 for an application form, or Go to the Dun & Bradstreet website at www.dnb.com.au to download an application form. Once you have completed the application form you can send it to: Dun & Bradstreet Public Access Centre PO Box 7405 St Kilda Road VIC 3004 If you are writing on a client’s behalf, include an authority from your client.

24. 4. Credit reporting and ‘bad credit’ – getting your report changed When can defaults be listed on credit reports? A default should only be listed on your report if: -you were at least 60 days in arrears, and - the lender has made a written demand for payment, and -the lender notified you, (at or before the time you entered into the agreement) that personal information would be given to a credit-reporting agency. How do I get my credit report changed? Complain to the organisation that listed the default or the credit reporting agency. If you are not satisfied, complain to the relevant industry external dispute scheme eg EWOV or TIO. If you still are not satisfied you can complain to the Federal Privacy Commissioner on Ph: 1300 363 992 or via their website www.privacy.gov.au.www.privacy.gov.au

25. 5. Payment difficulties Customers should contact their supplier if they are having difficulty paying a bill. They should also enquire about the supplier’s financial hardship policy. Electricity and gas retailers must assess a customer’s capacity to pay, offer the customer an instalment plan (that reflects the customer’s consumption needs and capacity to pay), and provide information about concessions, relief grants, energy efficiency and the availability of an independent financial counsellor. The water Customer Service Code and the telecommunications Credit Management Code contain similar obligations. As an advocate, it is important to look wider than issues of immediate affordability (perhaps addressed by payments by instalment, easyway payments (smoothed bills) or an URG) and look to ongoing affordability (concessions, energy efficiency eg. Energy Task Force).

26. 5. Payment difficulties – mobile phones Mobile Phone Tips Clients should be wary of $0 phones; such deals usually involve higher call costs Clients should consider asking their service provider to restrict or stop international calls or calls to premium services (eg 1900 numbers), which are very expensive. Clients should be wary of sales pressure suggesting they get a better offer if they sign up immediately. Shop around! If on a post-paid plan (pay after you make calls), consider asking for a ‘cap’ to be put on the plan, to stop spending over a particular amount each month. If phone is lost, ask service provider to block the SIM. Also report the loss to police.

27. 6. Concessions Holders of Commonwealth concession cards (Pensioner Cards, Health Care Cards) may be eligible for a concession from either the supplier or the Department of Human services. Government-funded concessions include: -Winter Energy concession; -Non-Mains Winter Energy concession; -Water and Sewerage Concessions; and -Utility Relief Grants (URGs). Concessions may be applied retrospectively to energy and water bills. There are different concessions available for customers living in rural areas.

28. 6. Concessions (2) Generally, suppliers must provide information on concessions – contact the relevant supplier. Some phone companies also offer concessions to Centrelink card holders. The Victorian Government Department of Human Services (DHS) Concessions Unit grants concessions for energy and water bills: Tel: (03) 9616 7600 1800 658 521 (toll free). Concession holders on permanent concessions are automatically entitled. Temporary concession holders (eg. unemployed) must apply each time.

29. 6. Concessions (3) DHS may grant an URG to assist in paying a water, gas or electricity bill where a person is experiencing temporary financial hardship. A second URG may be granted where there is a different instance of financial hardship. Collection action must be put on hold pending the outcome of the grant application. Contact the relevant supplier for an application.

30. 7. Disconnection– electricity and gas Energy retailers may disconnect customers for non-payment of their bills. A retailer must take certain steps before it is permitted to disconnect a customer, for example, it must: -Send a reminder notice not less than 14 business days from the date of the bill; -Send a disconnection warning not less than 22 business days from the date of the bill; and -Offer the customer an instalment plan. Less warning is required if the customer is on a shortened collection cycle.

31. 7. Disconnection – electricity and gas (2) A retailer cannot disconnect a customer in certain circumstances, including if: -It is a Friday, Saturday, Sunday, Public Holiday, the day before a Public Holiday or after 2pm on any other day; -the amount you owe is small (though the amount of this ‘limit’ is not disclosed); -The customer is only on a first instalment plan; -The customer has made a complaint to EWOV and it has not yet been resolved; or -The customer has applied for an URG and the application has not yet been decided.

32. 7. Disconnection – dual fuel Customers on dual fuel contracts may be disconnected from both electricity and gas BUT gas is disconnected first and electricity cannot be disconnected until 15 days later. A second warning notice must be sent at least 6 days before the proposed disconnection date. Wrongful disconnection payments From 1 January 2005 customers can receive a wrongful disconnection payment if they have been disconnected contrary to the provisions of the Energy Retail Code. The payment is set at $250 per day. The ESC have released an Interim Operating Procedure – Compensation for Wrongful Disconnection for guidance on how the code works. To claim the wrongful disconnection payment, contact the supplier.

33. 7. Disconnection – water Under the new Customer Service Code, a water business may restrict a customer’s water supply if: -for metro retailers, more than 28 business days have elapsed since the issue of the original bill; or -for RUWAs, more than 14 days have elapsed since the issue of a reminder notice. Before restriction, a water business must send a warning notice including information on hardship policies and other programs available to help customers with payment difficulties (i.e. concessions, EWOV).

34. 7. Disconnection – water (2) Further limits on restriction of water supply include: -a water business must attempt to make contact with the customer about non-payment; -a water business must notify customer of proposed restriction and associated costs (including cost of removing restrictor); and - a water business must offer a flexible payment plan (cannot restrict while a customer is complying with a flexible payment plan).

35. 7. Disconnection – water (3) A water business cannot disconnect a customer in certain other circumstances, including if: -It is a Friday, Saturday, Sunday, Public Holiday, the day before a Public Holiday or after 3pm on any other day; -The amount owed is less than $120; -The customer has made a complaint to EWOV and it has not yet been resolved; or -The customer has applied for an URG and the application has not yet been decided.

36. 7. Disconnection – phones The Credit Management Code sets out the process which suppliers of telecommunication services must follow to disconnect customers. The supplier has the obligation to advise the customer of the consequences of non payment and their financial hardship policy. Before restricting a service, the supplier must inform the customer of: - the supplier’s intention to restrict the service; - the nature of the restrictions; and - how the customer can restore access to the services. Emergency service numbers must be accessible from a restricted service.

37. 7. Disconnection – phones (2) Before suspending or disconnecting a customer, the supplier must make attempts to advise customer of: -financial counsellors and consumer advocates; -options options regarding repayment processes; and -the effect of non payment on other services that the customer has with the supplier. Before suspending a customer, the supplier must: -make reasonable attempts to inform the customer of the suspension, at least 7 days prior to the suspension taking place; -indicate the earliest date that suspension could occur; -review the decision to suspends within a reasonable time, upon request from the customer; and -discuss its financial hardship policy with the customer.

38. 7. Disconnection – phones (3) Disconnection without notice – a supplier may disconnect without notice if the customer presents an “unacceptably high credit risk to the supplier” or the supplier reasonably suspects fraud or attempted fraud. Before disconnection, a supplier must: -make reasonable attempts to inform the customer of its decision to disconnect 7 days prior to disconnection; -review the decision to disconnect at the customer’s request; -send a separate disconnection notice in writing prior to disconnection. -options options regarding repayment processes; and The supplier cannot impose a reconnection fee or charge for suspension, restriction or disconnection if the action resulted from a mistake of the supplier, however there are no wrongful disconnection payments available.

39. 8. Disputes – where to go for help – financial counsellors Financial counsellors across Victoria provide a free of charge service to consumers experiencing financial difficulties, including: -Assessing the client’s overall financial position and assisting with budgeting; -Identifying options including debt payments, social security entitlements, concessions, bankruptcy, emergency relief; and -Negotiating with creditors on a client’s behalf. Contact the Financial and Consumer Rights Council for a referral: Tel: (03) 9663 2000 Fax: 1800 134 139 (toll free) Email: fcrc@vicnet.net.au

40. 8. Disputes – where to go for help – industry ombudsman schemes Contact the supplier at first instance, if they do not assist you or your client fairly or satisfactorily, make a complaint to the relevant industry ombudsman. For complaints about mobile and fixed line phones, contact the Telecommunications Industry Ombudsman (TIO). The TIO is a free and independent alternative dispute resolution scheme for small business and residential consumers in Australia with unresolved complaints about their telephone or internet services. Telecommunications Industry Ombudsman Level 15, 114 William Street, Melbourne 3000 Tel: 1800 062 058 Email: tio@tio.com.au Web: www.tio.com.au

41. 8. Disputes – where to go for help – industry ombudsman (2) For complaints about energy, water and gas services, contact the Energy and Water Ombudsman Victoria (EWOV). EWOV is a free dispute resolution service for Victorian consumers of water, electricity and gas services. All energy retailers and water companies in Victoria are members of EWOV. All electricity and gas distributors are also members (eg. disputes about damage from a supply fault). You should try to resolve a dispute with the supplier first. If you have not done so, EWOV will refer complaints back to the supplier at a higher level. If a dispute cannot be resolved, EWOV will investigate: -Billing disputes; -Payment difficulties, disconnections, restrictions; -Refundable advances; and -Poor selling practices.

42. Energy and Water Ombudsman Victoria GPO Box 469D Melbourne VIC 3001. Tel: 1800 500 509 (freecall) Fax: 800 500 549 (freefax) Email: ewovinfo@ewov.com.au If you have identified a systemic problem about energy or water, you should contact the Essential Services Commission (ESC) on (03) 9651 0222 or via their website at www.esc.vic.gov.au.www.esc.vic.gov.au If you have identified a systemic problem with phones, you can contact the Australian Communications and Media Authority on 1300 850 115. 8. Disputes – where to go for help – industry ombudsman (3)

43. Consumer Law Centre Victoria (CLCV) 9/91 William Street, Melbourne VIC 3000 Tel: 1300 881 020 (local call cost) Fax: (03) 9629 6898 www.clcv.net.au Email: info@clcv.net.au 8. Disputes – where to go for help – contact the CLCV

44. Problem – unexpected high bill Christine is a young consumer on a low-income. She entered into a two-year mobile phone contract when a door-to-door salesperson came to her flat. The contract included a phone and cost $40 per month plus call charges. Christine used the phone to make calls to a friend who was travelling overseas and her first bill was over $800. She contacted the mobile phone company to try to negotiate a payment plan. She was told that she would have to pay $100 a week and that she would be disconnected from the service if she did not pay on time. She would then be liable for all of the remaining monthly payments under the contract. Christine cannot afford to pay $100 per week.

45. What can you do to help Christine? If Christine wants to keep the phone, you could try to negotiate directly with the company to put in place an affordable repayment plan for the unexpectedly high bill, while remaining connected to the service. The ACIF code requires that the company have enter into repayment plans that take into consideration the customer’s capacity to pay. Ask the company what their financial hardship policies are and whether Christine qualifies for any concessions. Also get the company to stop any credit management (e.g. debt collectors calling her) while the Christine is paying off the debt. Ask Christine if she would like her access to some services restricted, or a limit placed on her monthly spending. If the company will not resolve the complaint fairly, complain to the TIO or contact the CLCV for advice.