Joanna Elson, chief executive of the Money Advice Trust and a member of The Commission for Customers in Vulnerable Circumstances shares her thoughts on the Commission’s report, published today.
At National Debtline we are increasingly hearing from people struggling with smaller, trickier debts, often for essential household costs. Energy debt, along with water, council tax and rent arrears, is now a significant part of the household debt landscape. In many cases, energy debt goes hand in hand with other vulnerabilities, such as mental health problems, physical illness, disabilities and life events. Given this mixture of financial and non-financial vulnerability, combined with the essential nature of energy supply the question of how energy firms identify and address vulnerability is increasingly important.
That’s why I was pleased to be invited to join the Commission for Customers in Vulnerable Circumstances, set-up in February 2018 by the energy sector’s trade body, Energy UK. Chaired by Lord Whitty, we set out with the aim of exploring how standards of care and support for energy customers in vulnerable circumstance could be improved.
The Commission’s report, published today, puts the energy industry firmly under the spotlight on how it supports customers in vulnerable circumstances.
As one of the five commissioners I want to share some of the recommendations from the report and what we think is needed to improve practice.
An end to inadequate and inconsistent service
The evidence we gathered included many examples of good practice by energy suppliers. This is important, because it underlines the difference suppliers can make through the support they provide. However, that support is far too inconsistent, both across the industry and sometimes within the same supplier. For an essential service such as energy this is simply not good enough.
The Commission recommends that suppliers adopt a new independently-monitored Code of Conduct, to focus the industry’s own efforts to drive up standards.
A comprehensive regulatory framework
It is vital that customers receive the same minimum level of service and protections irrespective of who supplies their energy.
The industry regulator has a crucial role to play here. Ofgem has done good work to highlight consumer vulnerability in the past, and we look forward to its revised Consumer Vulnerability Strategy in the coming weeks. The regulator must now place consumer vulnerability at the heart of its licensing regime, so that every supplier that enters the market can demonstrate their ability to support customers. It is important that this is not just part of the criteria for being awarded a license to operate, but also regularly monitored to ensure companies are doing what they say they will.
Easy identification of needs and access to support from energy suppliers
As the report recognises, the nature of vulnerability is broad and customers are often unlikely to tell a company that they may be in a vulnerable situation. There is however more that could be done to improve both awareness and the ease with which customers can sign up to additional support such as the Priority Services Register (PSR).
Training frontline staff in how to identify and support customers in vulnerable circumstances is crucial. We have seen the impact this has had with financial services where many firms have embedded support for frontline staff to develop their understanding and practice in identifying and supporting their customers in vulnerable circumstances.
Through the Money Advice Trust’s own vulnerability training work with more than 200 creditors in this area, including working with energy suppliers, we know there is appetite out there to further improve this support.
A range of options to communicate with your supplier
Communication plays a key role and the way in which suppliers engage with customers can impact a situation. Not using a suitable communication channel can cause problems to escalate, particularly in relation to debt. For example, Age UK in their evidence highlighted that only four in ten people over 65 use the internet.
Providing a range of communication channels, including a free phone number is essential.
Effective links between suppliers and support organisations
There is clearly an important role for the third sector to play here. This could be through better signposting to debt or energy advice and helping people access financial help with energy and other costs.
More broadly, this is about drawing on expertise across sectors. We are seeing this happening in some cases and particularly through our partnerships at National Debtline with some suppliers, but there are plenty more opportunities to develop this work.
A smart energy system that works for and benefits vulnerable customers
Smarter energy systems have the potential to improve support for customers in vulnerable circumstances particularly in relation to self-disconnection. However, suppliers need to develop and share innovative practices which enable all customers to benefit from smart technology.
At National Debtline we know that people are increasingly struggling to meet household costs. There are many factors at play here with government and other agencies needing to help tackle the root causes. Suppliers may be able to help customers maximise their incomes, as the Commission recommends. They can certainly take care to use court enforcement sensitively and appropriately, avoiding the use of bailiffs, particularly in cases involving vulnerable customers.
The Commission strongly supports the government’s forthcoming Breathing Space Scheme – which will offer people in problem debt protections from creditor action while they receive debt advice. For energy customers in debt, Breathing Space would provide important flexibility for them as they go about dealing with their financial situation.
I hope that these calls to action, and the full set of recommendations in the report, will be taken as a constructive challenge by suppliers to do more on this crucial agenda.
As ever, a report like this is just the starting point. It is now up to suppliers, government and regulators to take these recommendations forward. Here at the Money Advice Trust, we look forward to building on our work with firms to help put this into practice.
Read the report of the Commission for Customers in Vulnerable Circumstances here.