News

The new Payment Difficulty Framework will challenge energy retailers in Victoria to improve how they deal with customers in financial difficulty, and has the potential to reduce disconnections when it becomes effective on 1 January 2019.

The Consumer Action Law Centre (Consumer Action) is cautiously optimistic that the new Payment Difficulty Framework released by the Essential Services Commission (Victoria) today can, if implemented in the spirit in which it is intended, deliver better outcomes for energy customers experiencing financial difficulty. The new Framework is the result of three years of consultation with industry representatives and consumer advocates.

The new Framework eschews a process-driven ‘tick the box’ approach to hardship and eventual disconnection, and instead opts for an outcomes-based approach—entitling consumers to active assistance from retailers, and ensuring that disconnection is a truly a measure of last resort.

Important changes include:

1. Consumers will no longer be disconnected if they fail two payment plans (the ‘two strikes’ rule). Retailers will be required to continue to assist customers for as long as the customer is taking reasonable action to pay.
2. A retailer will not be able to disconnect a customer for a debt of $120—the minimum disconnect amount will be raised to $300, in line with other eastern states.
3. Retailers will no longer get to decide when to offer assistance to a customer—under the new framework, retailers must contact a customer within 21 business days of a missed payment to discuss the customer’s entitlement to assistance.
4. Retailers will no longer get to decide who is a ‘hardship customer’ and who is not—all residential customers facing payment difficulty will be entitled to assistance.
5. There will no longer be arbitrary barriers to accessing hardship policies, and customers will be able to self-identify when they need assistance.

Consumer Action is disappointed that the new framework will not include default assistance, as proposed in the Commission’s draft decision, or welfare checks as a final safeguard against disconnection. People who experience mental health issues or other significant disadvantage may reasonably not be able to engage with their retailer, and a robust safety net should ensure that these people aren’t disconnected.

On balance, if the new Payment Difficulty Framework is properly implemented by energy retailers then there is significant scope for improvement—and greater consistency—in how vulnerable people are treated. Consumer Action will now provide comment on the draft Guidance Notes that are to be completed by the end of the year, and we will closely monitor the new Payment Difficulty Framework when it comes into effect to see that energy consumers are indeed getting better outcomes.

Quotes attributable to Gerard Brody, CEO Consumer Action Law Centre:

“We are cautiously optimistic that this new Payment Difficulty Framework will be a positive step forward for consumers—but much will still depend on the retailers. While we are supportive of the new Framework, the proof will very much be in the pudding and retailers’ preparedness to provide the necessary assistance to vulnerable consumers.”

“It’s pleasing to see that this long running process has finally concluded, and while it does not have everything that we hoped for, the new Payment Difficulty Framework should be a significant step forward for consumers, away from the dark days of mass disconnection that we have seen in recent years. Time will tell.”

“This new Payment Difficulty Framework challenges energy retailers to improve their practices, and change how they relate to customers experiencing payment difficulty. We hope that they will meet that challenge—and we’ll be watching closely to see if they do.”