On 18 January 2022, the AER released their six-monthly enforcement and compliance update, to summarise and report on their activities from July to December 2021. During that period, they reported:
- $ 1.89 million in penalties paid, from 12 infringement notices ($240,000) and 2 court decisions ($1.65 million)
- 5 court proceedings in progress
- 5 compliance audits undertaken
- 2 enforceable court undertakings
- 2 new guidelines released (regarding life support registration and Ring-fencing)
The AER listed the five main compliance and enforcement priorities for the 2021-2022 period where they directed their efforts. Of particular relevance to energy retailers are the first two priorities regarding financial hardship compliance and embedded network compliance.
Priority 1 – Financial Hardship Compliance
The focus on financial hardship provisions (which is set to continue), involved looking in detail into how retailers are adhering to and implementing the Rules and legislation, with a focus on how the retailer assesses financial difficulty and the ability of the customer to pay. The AER investigated and / or prosecuted matter such as:
- Systematic failures in implementing hardship policies and assessing capacity to pay (Origin)
- Failure to offer customers access to payment plans / access to company hardship program (Alinta)
- Conducted 4 compliance audits to look closely at internal practices. The AER plans to hold a workshop in early 2022 for audited companies to share their learnings
What does this mean?
The AER noted a ‘concerning trend’ of businesses failing to protect customers experiencing financial hardship (including companies not properly assessing their ability to pay in payment plans) and indicated that these findings would inform the direction of the compliance program for this year.
As the spotlight continues on this area, retailers should ensure their hardship processes are watertight and being followed and implemented correctly. Recent COVID rules should be taken into account, and a fair methodology in assessing payment plans developed.
Priority 2 – Embedded Network Compliance.
The AER focussed on embedded networks to ensure compliance with exemption conditions, particularly around customer access to ombudsman schemes. Membership of ombudsman schemes is a requirement for exempt sellers under certain jurisdictions (eg NSW and SA), and failure to do so can attract penalties. The AER contacted key industry associations to highlight this requirement, and are developing referral processes between state ombudsman schemes and the AER, to be able to check whether relevant embedded networks have obtained memberships.
What does this mean?
If you operate an embedded network in a jurisdiction requiring membership of an ombudsman scheme, make sure you have completed the process. In the near future, the AER will fairly quickly be able to identify non-compliance, which could result in penalties.
If you would like any further information about any of the above, please do not hesitate to contact us.