Credit, Collections & Insolvency News
Citizens Advice is calling on Ofgem to use its forthcoming vulnerability strategy to set out how it will better support vulnerable energy customers who fall behind on their bills.
The call comes in a new report from the charity detailing the experiences of people in vulnerable circumstances – for example, a disability or long-term health condition – who have been behind on their energy bills for over a month.
In 2018 Citizens Advice helped 43,232 people with energy debt problems through its local network. This was a 12% increase compared with 2017. Nearly half (48%) of these people had long-term health conditions or disabilities.
Since 2014, it has been more common for people to seek help from Citizens Advice about problems with essential bills, such as energy or council tax, than consumer credit e.g. credit cards.
The report revealed a number of common problems experienced by people in vulnerable circumstances once they get behind on their bills:
Energy suppliers’ approach to debt collection is often seen as aggressive and can make people’s problems worse
Vulnerable customers are unlikely to engage with support unless it is clearly framed as a way out of their problems
People in vulnerable circumstances face specific barriers to engaging with their supplier.
Citizens Advice is calling on the regulator to use its vulnerability strategy to make a number of reforms including:
Set clear targets for the sector’s performance on debt, for example, to cut the number of people in arrears without arrangements to repay, or for the average level of debt repayments to decrease
Make it a licence requirement that suppliers follow principles designed to assess a consumer’s ability-to-pay when setting debt repayment levels
Compel suppliers to trial different approaches to communications with customers about debt, if suppliers fail to do so voluntarily
Work with DWP to review guidance for Fuel Direct – the system via which payments are deducted from benefits to pay arrears.
Gillian Guy, Chief Executive of Citizens Advice, said “The regulator needs to set an ambitious vision for how suppliers should support and protect vulnerable people who fall behind on their bills.”
“Both Ofgem and suppliers need to take action and help people get over the barriers that stop them from seeking help and getting the right advice and support.”
“The package of support that’s on offer needs to be sensitive. Aggressive collection practices and demands for unaffordable payments only serve to make people’s lives more difficult.”
In response to Citizen Advice’s vulnerability report, an Ofgem spokesperson said “Protecting consumers, especially the vulnerable, is at the heart of what Ofgem does as Britain’s energy regulator. We have nearly eradicated disconnections for debt and put in place price caps for consumers on prepayment meters and on standard tariffs, which ensure most vulnerable consumers pay a fair price for their energy.”
“We welcome Citizens Advice important contribution to the debate on what further action we can take to protect consumers and we will be consulting on our new strategy setting out further measures to help vulnerable customers later this summer.”
Peter Earl, Head of Energy at comparethemarket.com, said “Protecting vulnerable customers should be a priority for the energy industry. Recent steps taken by the regulator – which were meant to protect all customers, including the vulnerable – have not had the desired effect. The energy price cap was meant to limit the impact of often unfair and excessive price rises, but instead customers on a standard variable tariff have been forced to fork out an additional £117 a year on average. For people already struggling to afford the cost of energy bills this will come as hard news to swallow. Our own study into an often vulnerable section of society – the elderly – found that one in eight (12%) over 65s fear they aren’t able to afford an increase in their bills. This demographic is one of the least likely to engage with and switch their energy provider. We urge the regulator to give more support to those who need it most.”