AER hardship review concludes there is room for improvement

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Introduction

The Australian Energy Regulator (AER) conducted a comprehensive hardship compliance review of several energy retailers, assessing their adherence to obligations towards customers facing financial hardship under the National Energy Retail Law and the National Energy Retail Rules.

AER powers

The AER, under section 206 of the National Energy Retail Law, holds the authority to issue compulsory notices to energy retailers. This review was a key project under the AER’s 2022-23 Compliance and Enforcement Priority.

Key findings of the review

  • Identifying hardship customers: Some retailers were found to inadequately identify customers experiencing payment difficulties, with an over-reliance on customers to self-identify. In contrast, other retailers had proactive systems to identify and support such customers effectively.
  • Informing customers of hardship policies: There was variable compliance in informing customers about the retailer’s hardship policy. Notably, some practices involved only offering payment extensions or short-term arrangements without informing customers of available hardship policies.
  • Application of payment plans: Concerns were raised about the use of non-hardship payment arrangements as the first response for customers, despite the presence of hardship indicators. This included inadequate consideration of a customer’s capacity to pay when establishing payment plans.
  • Considering a Customer’s Capacity to Pay: The review highlighted concerns with some conversations where agents may have inadvertently pressured customers into accepting payment arrangements that may not be affordable or sustainable. Good practice noted by some retailers involved a holistic approach to the consideration of a customer’s capacity to pay, including comprehensive budget assessments to determine the affordability of a payment arrangement.

Upcoming Review and Expectations

The AER plans to repeat this review process as part of it’s 2023-24 Compliance and Enforcement Priorities, focusing on improving access to retailer hardship programs and payment plan protections. Retailers are expected to enhance their practices in line with these findings. Any non-compliances identified as part of this review will result in further enforcement action.

Best Practices and Compliance

Retailers are required to develop comprehensive hardship policies, proactively identify and assist customers in hardship, provide clear communication, and offer tailored support solutions. The AER noted that current customer hardship policies could be improved and encouraged retailers to conduct a proactive review to ensure compliance with the AER’s customer hardship policy guidelines.

We encourage that your business conduct a review of its hardship policy and processes to ensure compliance, any non-compliances identified must be reported in accordance with the AER’s compliance procedures and guidelines

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