Under the Retail Law, authorised retailers must develop, maintain and implement customer hardship policies for their residential customers. The purpose of a retailer’s customer hardship policy is prescribed in the Retail Law—to identify customers experiencing payment difficulties due to hardship and to assist those customers to better manage their energy bills on an ongoing basis.
The AER approves retailers' compliant customer hardship policies in accordance with the Customer Hardship Policy Guideline (the Guideline). The Guideline creates binding, enforceable obligations on retailers to strengthen protections for customers experiencing payment difficulties due to hardship. In order for a retailer's customer hardship policy to be approved, the hardship policy must comply with the Guideline and contain clear and specific statements of the actions the retailer will take to meet the following minimum requirements, as specified in the Retail Law:
- processes to identify customers experiencing payment difficulties due to hardship, including identification by the retailer and self-identification by the customer
- processes for the early response by the retailer to customers in hardship
- flexible payment options (including payment plans and Centrepay) for the payment of energy bills by hardship customers
- processes to identify, and to notify customers of, appropriate government concession programs and appropriate financial counselling services
- an outline of programs that the retailer may use to assist hardship customers
- processes to review the appropriateness of a hardship customer's market retail contract against the retailer's hardship policy
- processes or programs to assist customers with strategies to improve their energy efficiency, where relevant
Further, hardship policies must include standardised statements specified in the Guideline that inform customers of how the retailer will comply with the minimum requirements and provide guidance to customers on their rights, and retailer obligations.
The AER must also be satisfied that the retailer's customer hardship policy will, or is likely to, contribute to achieving the purpose of a customer hardship policy.
The Retail Law requires the AER, when considering whether to approve a retailer’s customer hardship policy (or variation), to have regard to the following principles, that:
- the supply of energy is an essential service for residential customers
- retailers should assist hardship customers by means of programs and strategies to avoid disconnection solely due to an inability to pay energy bills
- disconnection of premises of a hardship customer due to inability to pay energy bills should be a last resort option, and
- residential customers should have equitable access to hardship policies, and that those policies should be transparent and applied consistently.
Under the Retail Law, energy retailers must publish their customer hardship policies on their websites. Clause 31(c) of the Guideline encourages retailers to also publish a shorter, more accessible ‘consumer friendly’ document that summarises the key features of their hardship policies.
The Guideline contains requirements to ensure that customers who need support are aware of retailer's hardship policies and that they are accessible. As well as these requirements, the AER expects retailers to consider and adopt best practice approaches to meet customer needs when implementing the Guideline. For example, this includes retailers effectively engaging with relevant organisations to promote their hardship policies, such as community and welfare organisations. The Guideline also specifically requires retailers to provide the relevant energy ombudsman contact details in their policies and to inform customers about their right to contact their energy ombudsman. We also encourage retailers to provide information about their hardship policies on customer energy bills and through customer service centres. By taking steps to promote and publicise their hardship policies and make them accessible to customers, retailers are ensuring their policies are transparent, equitable and consistently applied.
Ongoing monitoring of retailers' customer hardship policies
In addition to approving hardship policies, the AER has an ongoing role in monitoring retailers' performance in implementing their customer hardship policies and ensuring compliance with the legal requirements. For instance, the AER considers how retailers handle customers experiencing payment difficulties and their performance in respect of the AER's hardship program indicators in its annual performance report.