TIO targeted for massive shake-up

Internet and phone users will have to prove they’ve exhausted all avenues to resolve a dispute with their telco before hitting up the Telecommunications Industry Ombudsman (TIO), under a shake-up proposed today.

The TIO shake-up forms the majority of part A of the government's consumer safeguards review, for which a list of recommendations was released today.

The review calls for a “strengthened TIO scheme”, though the main outcome is likely to be a drastically lower number of complaints the TIO can accept and handle on consumers’ behalf.

Telcos have long criticised the TIO, arguing that it is incentivised to record complaints multiple times and escalate them to extract higher fees from the telcos that fund the scheme.

In that way, the findings of this latest review are not dissimilar to a process run by the Australian Communications and Media Authority (ACMA) back in 2010.

Eight years on, the government’s new review is concerned that “some consumers believe they will get a better outcome by going straight to the TIO rather than contacting their provider.”

So the new recommendations place a greater onus of proof on consumers to resolve complaints directly with their telco, and to prove they have done so before the TIO can act on their behalf.

Under what is being proposed, if a consumer comes to the TIO without seeking resolution from their provider first, the TIO would have to formally direct the consumer to complain directly first.

“Such contacts should be recorded by the TIO as an ‘external referral’ and not be categorised as a TIO complaint (as the provider has not yet had the opportunity to resolve the matter),” the review recommends.

That would mean the industry does not pay for these referrals, nor would they potentially inflate legitimate complaint numbers the TIO records (and periodically shames telcos with).

The TIO would also not be able to take on a complaint if the consumer had “made reasonable attempts to contact their provider, but had been unable to connect or speak to the provider”.

In this situation, the TIO would be obliged to “contact the provider on a consumer’s behalf and request the provider to make contact with the consumer.”

“The TIO should record this transaction as an ‘internal referral’, track this request and obtain confirmation from the provider that contact with the consumer has been made successfully,” the review states.

Under the proposed shake-up, the TIO would have to meet very specific criteria in order to actually accept and classify a consumer’s issue as a “complaint”.

“The TIO should accept a matter as a potential complaint if the consumer has genuinely been unable to obtain a resolution to their complaint from their provider or if the consumer is dissatisfied with the provider’s proposed resolution,” the review states.

“In doing so, the TIO should undertake an initial merits review and assess how the complaint has been handled by the provider and the appropriateness of any proposed resolutions offered.

“As part of this assessment, the TIO should determine whether the consumer should be advised to accept the proposed resolution(s) or if the TIO will formally accept the complaint.”

Structurally, the TIO will also have to change.

Telstra and Optus would lose their guaranteed spots on the board. The review recommends that “to remove conflicts of interest (perceived or otherwise), no director should be in the current employ of or be engaged by any telecommunications provider.”

The ombudsman would also have to be more transparent in its governance and decision-making.

In addition, the TIO would be overseen by the ACMA, which will require legislative change.

TIO told to "voluntarily" change

It appears the government will simply expect the TIO to change and will hold off formally directing the changes be made for the time being.

The review calls on the TIO to “voluntarily implement the recommendations within its remit - particularly those relating to a strengthened TIO Scheme - within 12 months.”

“Should the TIO not implement these measures within the designated timeframe and the Minister considers that change is necessary, the review recommends the Minister consider issuing a determination,” it states.

It is understood the government will work with the TIO, ACMA and Communications Alliance to implement the recommendations in the first instance.

The practicality of the Part A recommendations and their potential implementation are to be considered via a consultation process.

Industry worried

The extent of the shake-up has multiple sides of the industry worried.

The Australian Communications Consumer Action Network (ACCAN) expressed some concern about the TIO changes.

“We will be monitoring the implementation of the recommendations relating to complaint handling by the TIO carefully to make sure that complaint processes are not slower or more difficult to access for consumers," policy director Una Lawrence said in a statement.

"ACCAN supports a 'no-wrong-doors' approach for lodging a complaint with the TIO. This means consumers should not have to jump through hoops to have their complaint escalated and heard."

Additionally, the Communications Alliance - which represents telcos - cautioned that the changes could threaten the TIO's independence.

“Industry has never controlled the TIO – nor should we," Communications Alliance CEO John Stanton said.
 
“By the same token, we do not believe that the TIO should be placed under the control of the industry regulator, the ACMA.”

Stanton was also worried that the industry would wind up paying more - not less - for the TIO's presence.
 
“Many of the recommendations would act to drive up the cost of what is already an expensive scheme; and the cost of delivering telecommunications services to consumers and small businesses," he said.
 
“We need to look critically at whether additional layers of regulation would add real value, or just extra expense."