20 November 2018
Jane (not her real name) had fled from an abusive partner. She had slowly begun re-establishing her life with her two children, but money had been tight for some time. When her daughter fell ill, Jane had to take time off work to care for her, but as a casual worker she had no sick leave. She could not make payments on her debts, including utility bills.
She was then threatened with having her electricity disconnected unless she got an appointment with a financial counsellor within two days. She telephoned the National Debt Helpline completely overwrought – she didn’t know what to do and didn’t want to be disconnected.
In the past week alone, customers of Momentum, Origin, AGL, Lumo and Simply Energy have called the National Debt Helpline in a similarly distressed state because they have all been told the same thing by their energy company. “Get an appointment with a financial counsellor in two days or you will be disconnected.” I am a financial counsellor and for more than 12 months I and my colleagues on the helpline have been fielding such calls.
Financial counsellors advise, support and advocate for some of the most vulnerable people in society. It is an under-funded profession and the demands on workers are endless. So while I welcome the opportunity to be able to support anyone who is in financial difficulty, energy retailers also have social obligations to support people in financial difficulty. They shouldn’t outsource this to community workers.
What is particularly egregious is that energy companies are making such demands on their customers who are in financial difficulty, even though new rules will outlaw some of this conduct in six weeks’ time in Victoria.
Come January 1, under reforms introduced by the Essential Services Commission, an energy retailer will be required to offer assistance to all customers to prevent debt spiralling out of control. Customers will no longer have to provide financial information as a condition of accessing help when they are in financial difficulty. And the more financial difficulty someone is in, the more assistance the retailer is expected to provide.
I’m particularly relieved that retailers will not be able to require a customer to seek assistance from a financial counsellor. While I want to help people, and it is right to refer people to financial counsellors when their debts are complex, retailers should do their job too.
Demanding that people see a financial counsellor is unacceptable for a number of reasons. Seeking financial counselling is completely voluntary. Many people find it very difficult to speak about money – it has long been seen as a personal failing if a person is in financial difficulty even though people end up in debt due to a range of structural reasons.
Second, financial counsellors are under the pump and waiting lists to see a financial counsellor in the community can blow out to eight weeks or more. Do energy companies really expect their customer to jump the queue over someone who is about to have their house repossessed, for example?
It also seems the companies are trying to get away with putting as much pressure as possible on their Victorian customers in the next few weeks while they can.
Under current rules, energy companies in Victoria are only required to offer a customer two payment plans. They can refuse further help where a customer has not been able to adhere to the second plan. But often the payment plans are totally unrealistic, leaving vulnerable customers with few options. This is why the system needed to be changed.
Payment plans can help people catch up on their arrears. People fall behind on their bills for a host of reasons. Hours of work may have been cut without notice; or perhaps a child gets sick and there is a large medical bill; or they have had to pay an urgent car repair bill instead of their power bill because they need their car to get to work to earn a living. Furthermore, energy affordability is now an intractable problem for a significant group of people. Their hardship is not temporary and they will need affordable ongoing arrangements.
People are usually highly stressed when their bills are overdue. No one likes owing any one any money, least of all to a company that supplies one of life’s essentials. Vulnerable people will sign up to the payment plan suggested by the energy company’s call centre staff, even if it isn’t affordable. People want to be able to pay their bills but then reality hits and the payment plan can’t be met. The pressure mounts again.
Community advocates welcome the new rules that will come into force on January 1. Yet all these energy companies operate nationwide. If they are prepared to sign up to better practices as part of their social licence to operate in Victoria, why can’t they do the right thing and adopt the same practices for all their customers, wherever they live in Australia?
Elizabeth Minter is a financial counsellor at the National Debt Helpline, run by Consumer Action Law Centre in Victoria. Visit www.ndh.org.au.