Origin slapped with $17m fine for failing to protect vulnerable customers

Origin slapped with $17m fine for failing to protect vulnerable customers

Image via Origin Energy on Facebook.

Australian energy giant Origin Energy (ASX: ORG) has today been ordered by the Federal Court to pay a $17 million fine after failing to protect customers experiencing hardship and payment difficulties.

The fine - the largest total penalty ever imposed for breaches of the National Energy Retail Law and Rules - is the result of proceedings brought by the Australian Energy Regulator (AER), with the court finding the company breached hardship obligations on more than 100,000 occasions.

As admitted to by Origin, the energy retailer’s failures impacted more than 90,000 customers from four jurisdictions across New South Wales, the Australian Capital Territory, Queensland and South Australia over a period of nearly four years between January 2018 and October last year.

Origin also accepted that its automated processes for dealing with vulnerable customers resulted in it breaching its own hardship policies and retail rules by:

  • Unilaterally establishing new customer payment plans if the customer’s previous payment plan had been cancelled for non-payment, while failing to consider a customers’ capacity to pay;
  • Increasing a customer’s payment amounts following a review of the customer’s usage, while failing to consider the customers’ capacity to pay, and
  • Cancelling customer payment plans where it was unable to discuss with the customer a review of their payment plan, including in circumstances where customers were continuing to make their payments under the existing plans.

AER chair Clare Savage said the Court’s decision was a reminder to companies that automation could be “dangerous substitute” for human interaction, especially when it comes to those experiencing financial hardship.

“Applying automated inflexible processes across thousands of customers without considering whether they can actually meet the payments shows a complete disregard of the hardship obligations in the national energy laws, which are designed to protect customers in vulnerable situations,” Savage said.

“When a retailer automates aspects of its hardship program, it needs to ensure it continues to offer individualised and tailored solutions to customers and has regard to a customers’ circumstances as the rules require.

“For many customers, being unable to afford a necessity like electricity is distressing enough. If a customer is not afforded the protections under the laws and rules it may push them closer to debt collection and disconnection, causing even greater distress.”

Savage added that the record $17 million penalty reflected the seriousness of Origin’s breaches, and hoped it would send a strong deterrence message to other energy retailers.

“This message is even more important in the current market conditions where customers are facing significant cost of living pressures, including as a result of recent energy price rises,” she said. 

In addition to the $17 million fine, Origin has been ordered to pay $200,000 in legal costs and establish a compliance and training program to improve the way it manages vulnerable customers.

Shares in ORG are up 0.3 per cent to $5.95 per share at 2.58pm AEST.

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