Hearing impairment alters the sound input received by the human auditory system, reducing speech comprehension in noisy multi-talker auditory scenes. Despite such challenges, attentional modulation on the envelope tracking in multi-talker scenarios is comparable between normal hearing (NH) and hearing impaired (HI) participants, with previous research suggesting an over-representation of the speech envelopes in HI individuals (see, e.g., Fuglsang et al. 2020 and Presacco et al. 2019), even though HI participants reported difficulties in performing the task. This result raises an important question: What speech-processing stage could reflect the difficulty in attentional selection, if not envelope tracking? Here, we use scalp electroencephalography (EEG) to test the hypothesis that such difficulties are underpinned by an over-representation of phonological-level information of the ignored speech sounds. To do so, we carried out a re-analysis of an EEG dataset where EEG signals were recorded as HI participants fitted with hearing aids attended to one speaker (target) while ignoring a competing speaker (masker) and spatialised multi-talker background noise. Multivariate temporal response function analyses revealed that EEG signals reflect stronger phonetic-feature encoding for target than masker speech streams. Interestingly, robust EEG encoding of phoneme onsets emerged for both target and masker streams, in contrast with previous work on NH participants and in line with our hypothesis of an over-representation of the masker. Stronger phoneme-onset encoding emerged for the masker, pointing to a possible neural basis for the higher distractibility experienced by HI individuals.