According to research into debt collection issues seen by financial mentors, the most common type of problem debt people face is due to power and phone bills.

FinCap is pleased the Ministry for Regulation has opened consultation on options for regulation of the Telecommunications sector.

While the Commerce Commission has made progress with improvements to the Telecommunications Dispute Resolutions scheme, there is still more work to be done to develop minimum, whole of industry standards for hardship support and consumer protection.

The Commerce Commission recently engaged with financial mentors to understand the potential benefits of addressing consumer protection gaps in the telecommunications sector.

Financial mentors have repeatedly raised concerns around debts being created and pursued in ways that cause significant harm to people who are unable to pay, which contribute to people resorting to KiwiSaver Hardship Withdrawals to cover their outstanding bills.

In a submission to the Finance and Expenditure Committee in June 2025, a financial mentor highlighted some of the very real issues people face:

“There is a borrower protection gap with telecommunications purchases. I am daily seeing examples of budgeting clients with multiple phone purchases and add-ons that make their monthly telco bill unaffordable. This causes them to be locked into expensive phone plans, and they can’t downgrade or switch to prepay until the phone purchase has been paid off. There is no affordability assessment or easy dispute resolution for these telco debts.

“Telco customers regularly apply for Financial Hardship Withdrawals from their KiwiSaver for arrears on their telco bills and to help the monthly budget shortfall caused in part by the unaffordable telco plan.”

FinCap’s most recent Voices report found 1 in 8 people supported by financial mentors were exploring early withdrawal of KiwiSaver funds due to hardship. An ongoing persistent median telco debt of over $400 was also noted.

FinCap has also seen data suggesting missed telco payments rates are peaking higher and likely reducing many people's credit scores, which we know puts them at risk of financial exclusion.

Telco providers also offer credit for phones and other technology and services without proper affordability checks, along with unaffordable, complicated exit clauses and bundle arrangements, leading to significant increases in irresponsible lending.

FinCap has responded to the consultation, feeding back the insights about and urging the Ministry for Regulation to consider consumers in developing regulation that ensures ongoing access to essential telecommunications they need for their health, wellbeing and participation, and responsible lending.