Telstra is in strife again. Here’s why

Several fingers point at stressed looking man in the middle.Several fingers point at stressed looking man in the middle.

Major telecommunications company Telstra Group Ltd (ASX: TLS) has taken a hit to its reputation after the industry watchdog reprimanded it for harassing its most vulnerable customers.

The Australian Communications and Media Authority (ACMA) on Thursday revealed its investigation found the company took “credit management action” against clients who were already on financial hardship plans with the telco.

The authority directed Telstra to follow the telecommunication consumer protections (TCP) code, which compels telcos to suspend credit management action if a hardship arrangement is enacted.

Credit management can include actions such as suspension of service, disconnections, or debt collection.

In inflationary times such as now, it was critical that telcos supported clients in difficult circumstances, according to acting ACMA chair Creina Chapman.

“Telco services like phone and internet are now essential to daily life, used for everything from work and education, through to health and government services,” she said.

“So even briefly suspending or disconnecting customers can cause a real disruption to their lives.”

The Telstra share price was up 0.13% at the time of writing on Thursday.

Yet another problem with legacy systems

The ACMA investigation found that credit management action was taken against 70 Telstra customers when it shouldn’t have been, between August 2019 and April this year.

Twenty-two customers had their services restricted, four were suspended, five were disconnected, and two were pursued by debt collectors. The remaining received letters or phone calls demanding payment.

Telstra customer service executive Kate Cotter told The Motley Fool that the problem was “caused by legacy systems not synchronising properly”.

“We found and fixed the vast majority of these errors quickly, but we’re sorry that our processes let these customers down,” she said.

“We are well on the way to ensuring this is a thing of the past, by replacing these old systems with seamless digital experiences. In the meantime, we have implemented IT fixes and regular manual checks to prevent further issues while we complete our systems overhaul.”

This isn’t the first time ACMA has taken enforcement actions against Telstra for problems arising from legacy technology.

“Telstra must continue to address these longstanding issues as a matter of urgency so that its systems can deliver on customer safeguards,” said Chapman.

“Protecting telco customers experiencing financial hardship is an ACMA compliance priority and all telcos can expect greater scrutiny of their dealings in these matters.”

While the current action remains a direction only, the watchdog stated that any further breaches could lead to up to $250,000 in penalties.

The post Telstra is in strife again. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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