Telstra faces fine of up to $50 million over unconscionable conduct

Telstra has admitted that staff at five stores in Alice Springs, Casuarina, Palmerston, Arndale and Broome took advantage of customers with poor English speaking skills, difficulty reading and some who were unemployed when they convinced them to buy mobile phone plans.

In some cases staff did not provide a proper explanation of how much the plan would cost the customer and in some instances gave the impression their products were free. Some staff also falsely indicated in credit assessments that a consumer was employed. The average debt per consumer affected was $7400.

Telstra referred some unpaid debts to collectors, but has since taken steps to waive these debts, refund money paid and introduce steps to prevent this behaviour from re-occurring. The telco's annual results reported Mr Penn and other key executives missed out on $758,000 worth of incentives last financial year because of the poor practices.

"Our view in these matters is that the responsibility ultimately stops with the company’s leadership and the board’s decision on remuneration outcomes for Andy [Penn] and two of his executive team reflected that while there was no specific adverse conduct by them personally, they were ultimately accountable," Telstra chairman Paul Mullen said.

The ACCC said Telstra's board and executives were unaware of the poor practices and that Telstra had admitted it had no systems in place to prevent the conduct from occurring. Telstra chief executive Andy Penn apologised on Thursday for the behaviour of his staff.

"I have spoken often about doing business responsibly including about these failings since earlier this year. I am determined we have a leadership position and hold ourselves accountable in this regard," Mr Penn said.

"While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not OK. We have taken steps to provide full refunds with interest, waived debts and allowed most customers to keep their devices to help make things right."

The court will determine how much money Telstra will be fined, but the ACCC has also accepted a court-enforceable undertaking from Telstra which includes remediation for affect customers and a review and expansion of its Indigenous telephone hotline.

"Telstra is Australia’s largest telecommunications provider. It has clearly failed to meet community expectations for appropriate business behaviour," Mr Sims said.