The Commerce Commission wants the Telecommunications Dispute Resolution Scheme (TDRS) to become fully independent of industry group the Telecommunications Carriers' Forum (TCF).
The TCF is an industry body whose membership is made up of both retail and wholesale telecommunications providers.
A review of the TDRS by the regulator found that adjustments to the governance structure were needed to ensure its council was "fully independent of the TCF, and to establish clear lines of accountability".
The TDRS council is currently comprised of four consumer representatives and four industry representatives. The chair is appointed from the consumer representatives.
However, the TDRS council requires a 75 per cent majority, a minimum of six council members, to pass resolutions, meaning these can effectively be vetoed if either the consumer representatives of the industry one vote as a block.
"The TDRS council needs to have, and be seen to have, independence while representing consumers and industry appropriately," a draft report released today for consultation said.
"We consider that the current structure does not appropriately balance the need for independence."
The structure should change to ensure no one representative group had effective veto power, while retaining the benefits of having industry membership.
"Continuity of council members also needs to be balanced with the need to bring new voices and perspectives to the governance board," the report said.
"A well-balanced approach would allow council members time to come up to speed on the TDRS, drive continuous improvement, and ensure that evolving industry and consumer perspectives are taken into account by the TDRS."
The current governance of the scheme also stopped short of giving the TDRS council important power, splitting some roles and responsibilities between the TCF and the TDRS Council when dealing with the scheme agent, currently FairWay.
This meant there were matters that either explicitly sat beyond the TDRS council’s remit or were not clearly delineated as its responsibility.
"This is reducing the effectiveness of the TDRS council and harming the real and perceived independence of the TDRS," ComCom's report said.
"This is further exacerbated by the quality and frequency of reporting on the scheme to the TDRS council, and to the TCF, limiting the oversight of the scheme and the ability of the council to identify issues and drive continuous improvement."
The regulator's recommendations, based in part on findings from an independent expert report by consultancy Cameron Ralph Khoury (CRK), go further.
Telecommunications commissioner Tristan Gilbertson said that while the TDRS does some things well, it needed to raise its profile and performance in order to become a trusted and useful tool for consumers and telecommunications providers.
“Consumer complaints in the telecommunications sector have doubled over the last five years. This indicates that many of the problems that led to the scheme being established persist,” he said.
“There has never been a greater need for an effective industry dispute resolution mechanism – but our work shows that most consumers have never heard of the TDRS and, even if they have, they can find themselves locked out because many basic issues, including some speed and performance problems, are currently excluded.”
Gilbertson said this results in significant fragmentation of consumer complaints with a large number being raised with the commission, different agencies of government, or organisations like Consumer NZ and the Citizens Advice Bureau.
“This means the scheme is not working as effectively as it should because consumers and industry benefit when complaints are dealt with quickly and efficiently by providers or by an industry body set up specifically for that purpose,” he said.
“The recommendations we are putting forward today set out a pathway forward for the TDRS that will further boost awareness, capture more aspects of retail service quality, lead to faster resolution of complaints, and generally improve the governance and independence of the scheme.”
The TCF's new CEO, Paul Brislen, said the telecommunications industry was looking forward to working collaboratively and constructively with the Commerce Commission over the coming months to address the areas of concern reflected in the review.
“The TCF has already started work on a number of improvement measures for the TDRS that the commission has included in this draft, including a review of the customer complaints code, reviewing governance arrangements and significantly increasing the 2021/2022 marketing budget to boost consumer awareness of the scheme," Brislen said.
The number of users of telecommunications had grown significantly over the past two decades, he said.
New Zealand has more than 6.2 million mobile connections, and 1.79 million fixed connections, and that number was growing.
“On top of that, the way we use telecommunications has changed entirely in the same time," Brislen said.
"From making voice calls and sending text messages, the industry now enables online banking, video calling, remote working, entertainment of all kinds, education and learning opportunities and much, much more.
"I can’t think of another industry that has so many different touch points with so many customers.”
The number of complaints received by the TDR had grown on average by 14 per cent year on year.
In 2019/20,it resolved 2812 complaints and enquiries from consumers. Of those, 98 per cent were resolved promptly with service providers working directly with customers, Brislen said.
“The fact that only two percent of all complaints raised resulted in formal complaints to the TDR is a very good indication that New Zealanders are on the whole receiving good customer service from their providers,” he said.
The TDRS was created by the Telecommunications Forum to deal with consumer complaints about mobile, internet, and landline services more than a decade ago.
As a result of changes made to the Telecommunications Act in 2018, the commission is required to review the scheme at least once every three years and to report to the TCF on any recommendations to improve the service.
The commission’s report also recommends that a significant number of changes are needed to the TDRS customer complaints code to better align the scheme with consumer expectations, capture more retail service quality issues, and generally achieve better outcomes for consumers.
It has also recommended a full review of the scheme’s terms of reference and a revised agreement between the TCF as the scheme agent and the dispute resolution provider.
The commission published an open letter in October 2020 seeking views on the TDRS. In March 2021, it published a document outlining its approach to reviewing the scheme, followed by an issues paper in April outlining the issues it intended to explore.