Telstra billing system purge complaints soar

Telstra's $600 million fire sale of allegedly bad debt has again returned to haunt it. Complaints to the Telecommunications Industry Ombudsman (TIO) have soared to another all-time high.

Figures released today by the TIO show 2398 complaints related to telco credit control in the three months from June 2003 to September 2003, a significant increase of 281 from the previous quarter. Complaints are up a massive 1101 from September 2002.

"More than 1600 were related to the debt recovery practices of providers, their agents and more recently, debt recovery companies to whom telephone debts have been sold Telecommunications Ombudsman, John Pinnock, said.

While complaint breakdowns by carrier will not be available until December, a spokesperson for the TIO said the rapid escalation of complaints seemed directly connected to the sale of Telstra's $600 million debt to collection agencies Baycorp Advantage and Receivables Management Group (RMG).

Baycorp has been reeling ever since the purchase of the debt. There have been several board level resignations and it recently scrubbed more than $4.6 million worth of book value from the Telstra debt ledger.

Market analysts agree that Baycorp substantially overpaid for the debt at the time.

Both Telstra and Baycorp refuse to divulge what, if any, data grooming or duplicate reconciliation the companies engaged in prior to the sale.

Baycorp is also the owner of the former Credit Reference Agency (CRA), which determines the worthiness of credit applications.

Computerworld understands that the jurisdiction of the TIO was not factored into the sale of the debt, resulting in telco customers being blacklisted by Baycorp while debt was still in dispute.

This move has clearly annoyed the TIO, particularly as Telstra is a member of the TIO council.

"People were being put on the credit default register without even being able to sight a bill" a spokesman for the TIO told Computerworld. In a move likely to add more cost burden the collection agencies, the TIO is recommending people approached by telcos, or their recovery agents, check the age of any claimed debt, and ask for a copy of the original itemised bill. The TIO adds that in most states, the statute of limitations on debt is six years, after which it becomes uncollectable. The cost to the TIO of determining complaints is billed directly back to the individual telcos from whence they came.

In July 2003, the Australian Communications Authority explicitly prohibited the on-selling of disputed debt under the Australian Communications Industry Forum (ACIF) C541: 2003 Credit Management Industry Code.

The ACA has conceded Telstra "would have been aware" such changes were afoot when it sold its $600 million debt to Baycorp and RMG.

A Telstra spokesperson said that the timing of the sale of the debt was "pure coincidence".

He said the decisions were made by "quite separate arms of the company".

The spokesperson added that Telstra "was very concerned about every complaint" with the TIO and hoped that the complaint numbers would soon abate.

"We accept it is a Telstra problem" the spokesperson said.

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