Threatening disconnection ‘not a debt collection strategy’
27 May 2021
More than 100 representatives from 31 energy retailers have been told threatening struggling customers with disconnection as a debt collection strategy would not be considered ‘best practice’ according to national and state based regulators of consumer law.
Convened by the Essential Services Commission, the group heard from the Australian Consumer and Competition Commission and Consumer Affairs Victoria as well as the Energy and Water Ombudsman of Victoria.
Commission chair Kate Symons told the forum that disconnection as a strategy for retailers to recover debt is flawed.
“Disconnection, even just the threat of disconnection, is stressful for consumers.
“It can be seen as a shameful reminder of failure and reinforces a lack of trust in the energy sector,” she said.
David Salisbury, general manager with Australian Competition and Consumer Commission, told the forum their first priority is to achieve the best possible outcome for the community.
He pointed to the ACCC’s debt collection guideline which represents best practice, telling the group they need to ensure their policies and processes are robust and importantly, followed by third party agents.
Director of Consumer Affairs Victoria, Nicole Rich reminded the group that debt collectors in the energy sector are bound by the same laws as debt collectors in other sectors. She outlined a list of debt collection practices banned in Victoria and relevant penalties.
Joshua Watson and Sabrine Malki-Butcher from the Energy and Water Ombudsman Victoria outlined recent trends and issues in energy debt collection in Victoria.
They stressed that positive engagement and collaboration with customers are essential to effective retailer debt collections, and in preventing customers from accruing debt in the first place.
Please note, this is a summary not a verbatim transcript.
Good afternoon everyone and welcome to today’s energy industry debt collection forum.
To start, I’d like to acknowledge the Traditional Owners on all of the lands wherever you are today.
For me, I am speaking from the lands of the Wurundjeri People and I wish to acknowledge them as Traditional Owners.
I would like to pay my respects to their Elders, past, present and emerging, and Aboriginal Elders of other communities who may be here today.
I’d like to introduce our guest speakers for today and can I express our gratitude to them for taking the time to come and share their knowledge and experience with us.
David Salisbury – General Manager, Consumer and Small Business Strategies, Australian Competition and Consumer Commission
Nicole Rich – Executive Director, Consumer Affairs Victoria
Joshua Watson – Systemic Issues and Policy Specialist and Sabrine Malki-Butcher who is a conciliator from the Energy and Water Ombudsman Victoria.
Today, I welcome more than 100 representatives from energy businesses from across Victoria as well as peak bodies.
We also have observers from the Energy and Water Ombudsman Victoria, the Australian Energy Regulator, staff from government departments, including the Department of Environment Land Water and Planning.
Thank you for making time to be here today.
As many of you will know, we have been ramping up the number of workshops and interactions we have with the energy sector in response to requests for more conversations around compliance and greater clarity around our expectations.
We are however mindful that there are many calls on your time, so we are working hard to integrate and combine sessions where we can minimise the impost on your time.
Please let us know how we are doing and let us know if you have any suggestions on how we can do better.
Now to today’s purpose.
While the initial phase of the coronavirus pandemic in Victoria appears to be over (noting though there have been restrictions reintroduced from yesterday evening in Victoria) and while there are signs the economy is in recovery, there are also worrying signs some energy consumers are not.
Just last week, we released a report on data collected over the past 12 months which showed average debt for customers on payment plans has increased significantly over the past year.
The numbers are quite disturbing with average debt for customers on tailored assistance who cannot pay for their ongoing usage up by 35 per cent since the beginning of the pandemic.
Disconnection numbers have also risen sharply after being temporarily halted during the lockdowns of 2020, with more than 4,000 in the first four months of this year.
And while we are hearing the economy is bouncing back, there are clear signs that normal for many is a long way away.
Which is why today we are focusing on debt collection, the rules around debt collection… and examples of how your company can help raise the standards for debt collection in Victoria, and along the way improve trust in the energy sector.
Our message today is disconnection should not be considered a debt collection strategy.
Over recent years, we have been told that disconnection is an effective strategy, and we want to challenge that notion.
Disconnection, even just the threat of disconnection, is stressful for consumers.
It can be seen as a shameful reminder of failure.
It also reinforces a lack of trust in the energy sector.
But we know there are better ways.
We are here today to encourage you to think differently about disconnection notices and engaging consumers who are experiencing vulnerability as part of your approach to debt collection.
We hope that bringing you all together to engage with the expertise and experience of the Australian Competition and Consumer Commission, Consumer Affairs Victoria and the Energy and Water Ombudsman will raise the standards for debt collection in Victoria’s energy industry.