Draft TCP Standard: A significant change is coming for Australian CSPs

Compliance with the TCP Standard will be mandatory and directly enforceable by the ACMA

As an industry code, the TCP Code represented a co-regulatory regime where compliance was overseen via Communications Compliance with the ACMA’s enforcement role primarily limited to issuing CSPs with formal warnings and directions to comply.

Once made, the Draft TCP Standard will be an industry standard, and breaches will be directly enforceable by the ACMA, including through infringement notices or civil penalties.[1] 

All CSPs will be subject to strengthened governance obligations – more reporting, approvals, monitoring and training 
(Part 2, Draft TCP Standard)

CSPs will be required to maintain policies, processes, procedures and training materials that address the CSP's obligations under the Draft TCP Standard. These documents must be:

• reviewed at least annually (or sooner in specified instances including where the CSP identifies they are not sufficient; where the CSP is found to have breached the Draft TCP Standard; or after a substantive change to the Draft TCP Standard, or to the CSP’s systems, processes or operations that may affect its ability to meet its obligations); and
• approved by the CEO for Large Providers (i.e. any CSP with at least 30,000 services in operation) or, for other CSPs (i.e. any CSP with fewer than 30,000 services in operation), by a senior executive. Notably, the concept of large CSPs is much broader than the TCP Code which considered a ‘Large Supplier’ to be a CSP with over 100,000 services.

The new governance obligations are complemented by strengthened training and monitoring requirements including:

• detailed training (including compulsory assessment) for all personnel (including staff, contractors and agents) who have contact with consumers (and their managers). This training, which covers the requirements of the Draft TCP Standard, communication and customer awareness, must be undertaken at least annually; and
• detailed internal monitoring undertaken each quarter.

Given the breadth of these obligations, all CSPs (regardless of size) will practically need to undertake a detailed mapping of their current processes and policies against the final standard and implement new internal reporting/auditing processes.

New positive duties relating to consumers experiencing vulnerable circumstances
(Part 3 and section 48, Draft TCP Standard)

CSPs will have a new positive obligation to take reasonable steps to identify a consumer’s telecommunications needs and whether a consumer may be experiencing vulnerable circumstances. Where a CSP identifies (or reasonably suspects) vulnerable circumstances, the consumer must be advised of available support and assistance.

Customers may also request relief within 6 months of making a purchase if their decision-making was impaired by a vulnerability at the time of purchase. If the CSP determines the customer’s decision-making was impaired, the customer must be allowed to exit their contract (without early exit fees).

With vulnerable circumstances broadly defined to capture financial hardship, disability, domestic, family or sexual violence, age, illness, language barriers, natural disasters or other circumstances affecting the ability to access or maintain services – this obligation is significantly broader than existing obligations on CSPs under the Financial Hardship Standard (though, to the extent of any inconsistency, the Financial Hardship Standard and the DFSV Standard prevail).

New customer remedies and exit rights introduced for tech changes or inadequate mobile coverage
(Sections 46 and 47, Draft TCP Standard)

In addition to the remedies for customers in vulnerable circumstances (see above), the Draft TCP Standard introduces new remedies for:

• CSP-initiated changes to its network, technology or services where, as a result of the change, the telecommunications service or goods no longer substantially meet the customer's needs. In this situation, customers can request a remedy within 6 months after becoming aware (or when they could reasonably be expected to become aware) of the impact of the change. If the CSP is satisfied the test is met, it must offer an equivalent service or another reasonable solution at no additional cost or, if this is not possible, terminate the customer's contract (without an early exit fee); and
• mobile network coverage that does not meet the customer’s reasonable expectations. In this situation, customers can request to terminate their contract within 20 business days of purchasing a mobile service (without paying an early exit fee). However, where repeated requests are made within 6 months, CSPs can assess the request to determine whether it is made in good faith.

These remedies are likely to be controversial and have the potential to disproportionately impact smaller CSPs.

New restrictions on responsible selling and sales incentive arrangements – including having a written performance remuneration policy for monetary or non-monetary sales incentives
(Part 5, Draft TCP Standard)

Similar to responsible lending, CSPs will have positive obligations to:

• engage in responsible selling (which covers acting fairly, providing customers with information to make informed decisions, and not selling consumers unsuitable products);
• not engage in conduct that would place undue pressure on a consumer (e.g. inducing a customer to acquire products that are not appropriate);
• (during an assisted sale) make reasonable enquiries to understand the consumer’s needs and inform them of suitable telecommunications products; and
• (for mobile services) provide consumers with information about expected mobile coverage services.

These obligations extend not just to sales by the CSP but to third parties selling a CSP’s services/products.

In addition, CSPs who offer performance payments or other monetary or non-monetary sales incentives to sales staff will be required to implement a written performance remuneration policy which (amongst other requirements) imposes restrictions on the weighting of performance metrics and caps a staff member's maximum performance payment entitlement at no more than 20% of their base salary.

Where staff make a sale that breaches a CSP’s responsible selling obligations, the CSP must: withhold unpaid performance payments/rewards; take reasonable steps to recover (to the extent lawfully permitted) paid performance payments; and restrict eligibility for future performance payments for a minimum period of three months. Although some of these proposals were previously suggested by the industry, there are open questions as to how these new obligations would be implemented in practice. Amongst other things, these obligations may cut across employees’ contractual terms and conditions of employment or obligations in industrial instruments and there are real questions about how performance payments can be lawfully recovered.

New restrictions on mis-selling
(Section 45, Draft TCP Standard)

If a CSP becomes aware of mis-selling, it must, within 7 business days, take reasonable steps to contact each affected customer and inform them of the mis-selling and available remedies. The remedies that must be available include refunds, returning the affected customer to the position they were in before the sale (or as close as possible to that position where it is not reasonably practicable to do so); terminating the contract without charge; amending the contract without charge or penalty; or another remedy agreed between the provider and the affected customer.

The concept of mis-selling is broadly defined and extends beyond breaches of responsible selling obligations in the Draft TCP Standard to capture areas already covered by the Australian Consumer Law (ACL) (e.g. making false or misleading claims; not confirming that consumers understand what they are buying and its cost; selling products that do not meet expressly stated needs; coercive or harassing behaviour; selling a product that the provider has no reasonable confidence would be able to be delivered; knowingly targeting consumers who are experiencing vulnerabilities; and manipulating credit assessment processes).

As such, there will be substantial overlap between the mis‑selling provisions in the Draft TCP Standard and existing economy‑wide obligations under the ACL, including the prohibitions on misleading or deceptive conduct (s 18), false or misleading representations (s 29) and unconscionable conduct (s 21). How these two regimes will interact in practice remains an open question.

Overlap between sector‑specific regulation and the ACL is not unusual. In most cases, industry standards impose obligations that add to the ACL rather than conflict with it: a provider that complies with the more prescriptive sector rule will often also comply with the ACL, and the ACL continues to operate as a baseline. True inconsistency, where compliance with one regime would require a breach of the other, is less common. However, the more practical risks are: duplicated regulatory oversight by the ACMA and the the Australian Competition and Consumer Commission (ACCC) in relation to the same conduct; and differences in key concepts or thresholds between the two regimes.

That said, the ACMA is required to consult with the ACCC before the industry standard is made. It is therefore possible that the mis‑selling restrictions will be refined before the standard is finalised, particularly where they are inconsistent with, or would create uncertainty about, a provider's obligations under the ACL. 

Tighter and more expansive credit assessment requirements
(Sections 50 to 54, Draft TCP Standard)

Under the TCP Code, credit assessments were only required for residential customers acquiring post-paid services, and where the contract would result in debt of more than $1,000.

However, the Draft TCP Standard significantly expands the credit assessment requirements to capture contracts that may result in a debt owed to the CSP of:

• (for residential customers) more than $300 (indexed annually); and
• (for business customers) more than $2,000 (indexed annually).

With the new amounts capturing both services and goods (i.e. devices), it practically means that most post-paid contracts will require a credit assessment going forward. Some stakeholders have already told the ACMA that $300 is too low, and the ACMA has acknowledged the threshold may have unintended impacts (such as multiple credit checks being undertaken on customers shopping around for new services). The ACMA is seeking feedback on whether a dollar threshold should apply at all, so it is possible these amounts may change.

Digital-only service models will be significantly restricted – there needs to be a human-operated contact channel
(Section 59, Draft TCP Standard)

Amongst the range of prescriptive customer service obligations proposed in the Draft TCP Standard (including in relation to managing deceased customers' accounts), CSPs will be required to make available a human-operated contact channel to respond to, and manage, customer service issues. Notably, this prohibits sole reliance on automated responses (including chatbots and AI systems) which will significantly restrict digital-only service models for low-cost and MVNO brands.

All Large Providers will also be required to review their customer service performance each quarter and publish quarterly reports on their websites (covering the most recent 8 quarters).

Other notable changes

More prescriptive credit management processes: A CSP’s ability to restrict, suspend or disconnect services will be significantly more structured, with restriction not permitted earlier than 10 business days after a first reminder notice, suspension not permitted earlier than 5 business days after a second reminder notice, and disconnection not permitted earlier than 5 business days after a third reminder notice. There are also prohibitions on credit management action during national public holidays or a natural disaster in the billing address area, as well as more prescriptive debt-collection requirements.

Critical information summaries: The mandatory content of Critical Information Summaries will be significantly extended (and the two-page limit lifted). This includes information about payment timing (e.g. prepaid, upfront, post-paid), payment methods, consequences of cancellation, clearer links to interpreter services and National Relay Service contacts and links to the SFOA and fair use policies.

Usage information: CSPs must give customers free access to usage information that is no more than 12 hours old, compared with 48 hours.

Payment methods: CSPs must offer customers at least two fee-free payment methods, one of which must be a manual payment method.

Direct debit: CSPs must: give at least three business days' notice before a scheduled debit, (if requested) cancel a direct debit within one business day of a customer's request (this was previously three business days) and refund any incorrectly debited amount within three business days (this was previously 10 business days).