The Australian Energy Regulator (AER) has published results of its audits into Alinta Energy, Simply Energy, ReAmped Energy and Powershop with a focus on compliance with hardship and disconnection obligations. The audit results provide important information to all energy retailers as to what is expected when it comes to compliance in these key areas.
The audit assessed the adequacy and effectiveness of compliance policies, procedures and systems in a number of key areas and assigned an overall grading of either adequate and effective, partially adequate and effective, or inadequate and ineffective.
Simply Energy’s audit results contain a total of 12 findings and 12 recommendations. The findings included:
- That a training matrix recording the training provided to agents had not been maintained;
- That the Simply Energy hardship policy had not been formally reviewed since November 2019 and that there was no documented control table;
- That Simply Energy could increase visibility of the hardship programme by including reference to the programme on invoices for residential customers;
- That there was no current formal documented website change management process;
- In seven out of 46 samples, the payment plan status incorrectly displayed “payment plan completed” when the customer had defaulted on their payment plan;
- That Simply Energy did not have a conflict of interest registered in place to record conflicts regarding debt collection;
- That in one instance the best endeavours checklist item was marked as failed but the disconnection proceeded. Simply Energy provided sufficient evidence to confirm that best endeavour attempts had been completed correctly and that the checklist was completed inaccurately as a result of an agent error;
- From a sample of 23, the auditor identified 17 instances where the disconnection checklists and disconnection service orders were actioned by the same agents;
- That an investigation sent to the compliance team on 5 May 2021 had not yet closed and that investigations currently come out of Salesforce investigation module into an email review and approval process, and then back into another module of Salesforce;
- That the clarity of recommended fortnightly/weekly payment plans could be improved by stating the plan duration that was used to calculate it;
- That Centrepay pay as a payment option was not detailed on customer invoices;
- That in one instance the agent failed to advise a customer establishing a payment plan that Centrepay was a payment option despite the customer communicating to the agent that they were unemployed.
There are a number of learnings that retailers can take away from the audit results including;
- That retailers should establish and maintain a training matrix covering agents representing their business that captures training outcomes including instances of retraining or coaching;
- That a retailer’s customer hardship policy should be reviewed on an annual basis and that a retailer should implement formal document control processes;
- That retailers should promote a hardship programme by reference to the programme on invoices for residential customers;
- That retailers should have a change management process in relation to changes for all documents and websites;
- That retailers should have appropriate controls to ensure that their systems display the correct status of payment plans;
- That retailers should establish a conflict-of-interest register and a formal process for reporting conflicts of interests including in relation to debt collection activities;
- That retailers should implement controls to prevent de-energisations being raised with incomplete or inaccurate de-energisation checklist;
- That any compliance breaches should be managed by a well-defined and efficient process,
- That retailers should develop call scripting to provide clarity to customers wanting to set up a payment plan; and
- That retailers should ensure that their staff are trained in the option of Centrepay and that appropriate messaging is included on energy invoices.
In the case of Alinta there were five findings and five corresponding recommendations. The findings are summarised below:
- That there was an inconsistency between management-stated policies in Work Instructions and the operational processes with regard to payment plans. Inconsistencies were in relation to how often payment plans were reviewed, and the provision of correspondence to customers post-completion of their review;
- That while management was able to demonstrate how quality assurance scorecards are traced to individual interactions, no customer reference numbers were included;
- That while agents had completed their mandatory training and systems and processes were in place to monitor training completion, there was no policy which aligned responsibilities for following up and disciplinary action in relation to agent training completion;
- That there was no formal documented policy for regular review of the hardship policy for regulatory reform changes; and
- That the retail market events management procedure document maintained by the business should be formalised to ensure that staff are aware of the regulatory reporting requirements in relation to breaches of obligations.
Lessons that can be taken away by energy retailers from the above findings include:
- That Work Instructions should reflect management’s intentions and the actual operation of controls that they relate to;
- That a unique reference number should be included for monitoring activities undertaken by a quality assurance team with an effective audit trail;
- That retailers should implement a policy to assign responsibilities to monitor agent training completion to ensure that mandatory training is completed by all agents within a reasonable timeframe, and that disciplinary actions where agents have not complied with mandatory training policies are enforced;
- That retailers implement a policy for the regular review of the hardship policy including clear response to regulatory changes.
There were four findings in the audit conducted of Powershop Australia. These are summarised below:
- That there was inadequate segregation of duties within the processes that provide oversight on customer disconnections;
- That quality assurance processes were not defined in terms of coverage of the business processes, methodology of review, sample selection, reporting and management of expectations;
- That the credit management and vulnerable customer guideline which describes the key activities required to ensure that vulnerable customers are handled in the most appropriate manner and in compliance with all regulatory requirements did not provide adequate guidance in all areas relating to management of vulnerable customers, with formal position descriptions not prepared for key positions within the hardship management process; and
- That there was limited training material in relation to disconnection, debt recovery and statutory reporting obligations with reliance placed on the knowledge and experience of their credit delivery and performance manager and compliance advisor to discharge critical compliance operations.
Various lessons can again be learned from the results of the PowerShop audit. These include:
- That segregation of duties should be implemented within the oversight process on customer disconnections;
- That quality assurance processes be defined in terms of its intent, methodology and outcomes with a range of minimum areas covered;
- That work instructions be provided for interim activities within the management of vulnerable customers;
- That the hardship policy be updated to inform customers that debt recovery is the final step in dealing with hardship customers;
- That retailers ensure that they have formal job descriptions including roles and their responsibilities for all key positions;
- That the training material should be revisited and enhanced to cover disconnection, debt recovery and reporting requirements; and
- That retailers implement oversight controls to ensure management is provided with the reports on the status of staff training in relation to hardship and relevant reporting obligations.
Finally, a report was published in relation to ReAmped Energy. The findings of this report included:
- That the hardship policy was due for review;
- That there was no formal training for the customer experience team to enable the identification of customers experiencing payment difficulties;
- That there were delays in following up with customers who missed payments in their payment plans;
- There was a conflict-of-interest declaration; and
- That there could be improvement in communication with customers regarding their rights and responsibilities in the event of debt collection.
Yet again, retailers can take the results of this audit and implement improvements within the business including:
- That retailers should update their hardship policies and note when it will be reviewed;
- That retailers should implement formal training and refresher training for all staff in the identification of customers experiencing payment difficulties and treatment according to the hardship policy;
- That hardship measures and customer complaints be included in a quality assurance scorecard;
- That retailers should maintain a disconnection checklist;
- That compliance and performance reporting processes be documented and that staff be trained to perform the compliance and performance reporting functions;
- That training material be developed on all compliance systems to reinforce the breach reporting process; and
- That retailers should implement a conflict-of-interest process and method of identification of potential conflicts in relation to customer hardship.