Telstra will have its system subjected to a compliance audit after it found 67,000 customers were waiting on AU$11 million in compensation.

The monetary compensation was due to the telco not meeting timeframes around landline connections and repairs -- typically telcos have two weeks to make the payment.

As well as making the payments and entering into a two-year court enforceable undertaking with the Australian Communications and Media Authority (ACMA), the telco also needs to report to ACMA regularly while the undertaking is in force.

"Telco customers are entitled to compensation to make up for delayed connections or fault repairs of their landline. Telstra has let down its customers by not paying compensation in a timely manner," ACMA chair Nerida O'Loughlin said.

"Telstra knows it has had a problem with its internal systems and processes, uncovered through its T22 business strategy. The company has self-reported this and other recent breaches."

Despite the chair's words on Telstra's self-reporting, ACMA said it was its own investigation that "found" the errors from July 2017 to June 2021.

A spokesperson for Telstra emphasised it was the telco that found the issue.

"We self-reported this to the ACMA and made the payments to customers," they said.

"Following this we did a deeper dive into our systems to check on [customer service guarantee] payments, and this identified a number of other instances when payments had not been made when they should have. We have now made these payments, and entered into the undertaking with ACMA announced today.

"We deal with millions of customer transactions weekly however this is clearly not the experience we want to be providing our customers. We are in the process of improving the system to better automate the payments."

Earlier in the week, ACMA released a statement of expectations for how telcos should handle vulnerable customers and those in financial hardship.

"Many Australians will experience vulnerable circumstances in some form or another during their lifetime. The devastating effects of the COVID-19 pandemic and natural disasters such as fires and floods show just how quickly and unexpectedly people's circumstances can change," O'Loughlin said at the time.

"It's important that telcos have processes in place to recognise and provide appropriate customer care and service to people in these situations."

The expectations state that all customers should be treated fairly and reasonably, telcos be proactive in identifying and responding to vulnerable customers and have better processes in place to assist them, and have business plans to support vulnerable customers.

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