Call for greater collaboration between energy suppliers and debt advice providers

New research by the Personal Finance Research Centre at the University of Bristol, in partnership with Ofgem and StepChange Debt Charity has highlighted the critical role that effective referrals from energy suppliers to free debt advice can play in supporting households with energy debt, and where the energy sector can do more to protect vulnerable customers.

The research, which analyses three years of StepChange client data alongside a survey and qualitative interviews with StepChange clients with energy debt, reveals a high level of financial vulnerability. Nearly half (47%) of StepChange clients with energy debt reported being on the Priority Services Register (PSR).

Four in ten (42%) survey respondents had experienced financial difficulty at some point in the past, and two in ten (19%) had done so multiple times. Over a third (36%) of respondents felt unfairly treated in relation to energy bills, a sentiment second only to concerns about Council Tax arrears (37%).

Of the survey respondents who told their supplier that they had extra needs (27%) (for example, a health condition or impairment), almost six in ten (57%) said it led to no change in support/customer service. Half of the survey respondents (54%) said their energy supplier continued to chase them for arrears while they contacted StepChange.

The report findings highlight that when referrals from energy suppliers to debt advice are handled well, the positive impact on customer outcomes is clear. Since contacting StepChange, three-in-five (60%) survey respondents had made at least some progress sorting out their energy debt. Whilst almost two in five (38%) survey respondents agreed that “I wouldn’t have found StepChange if my energy supplier hadn’t told me about them.”

The research recommends several quick wins for the energy sector to improve treatment of customers in debt, particularly if they’re vulnerable. This would require adequate training for energy suppliers’ frontline staff on what a best practice referrals process looks like. In the longer term, there needs to be greater coordination between the energy and debt advice sectors to create a smoother and more empathetic journey for struggling households.

Vikki Brownridge, CEO at StepChange Debt Charity, said “Following the energy crisis, StepChange has seen a sharp rise in referrals of clients with high levels of energy debt. As this research shows, people with energy debt often have complex needs, with ongoing financial and other vulnerabilities. What it also shows is that when referrals are done well, they can be a turning point in someone’s journey out of debt.

“There has already been a good level of collaboration between energy suppliers and debt advice providers to respond to this crisis and meet customer’s needs. However, it’s clear that there are areas of improvement to be made and it’s vital we work together to ensure clients are best supported to deal with debt problems in a way that leads to the best long-term outcomes.”

Professor Sharon Collard, at the University of Bristol’s Personal Finance Research Centre, said “This research shows that energy suppliers play a really important role in helping their customers access free independent debt advice. It was great to hear the lively discussions in our workshops between energy suppliers, debt advisers and other consumer experts about what’s working well and where there is room for improvement to make sure that all energy customers who need debt advice can access it in ways that work for them.”

Jemma Baker, Deputy Director Future Retail Markets, Ofgem, said “Debt advisers are vital in supporting energy suppliers to engage with their customers and support them onto affordable and sustainable repayment plans. We know there are some great existing partnerships between energy suppliers and debt advice organisations that benefit energy consumers who need help. However it is clear more can be done, and we welcome both sectors working together to help improve processes around third party referrals. Our thanks go to StepChange and PFRC for this insightful report.”