Working with debt advice providers to support consumers in energy debt

Key Take Aways

1. Energy debt remains a significant challenge, with three quarters of current debt in the market lacking repayment plans, underscoring the need for targeted support for vulnerable households.
2. Consumers in financial vulnerability frequently seek advice from debt charities, highlighting the critical role of debt advice providers in managing energy debt and supporting repayment.
3. There is a recognised difficulty within the energy sector in collaborating effectively with debt advice providers, especially when compared to the financial services industry.
4. Despite improvements in customer satisfaction, those in ‘highly financially vulnerable’ circumstances report notably lower satisfaction levels with their energy suppliers.
5. Ofgem aims to enhance sector relationships through a series of initiatives, including the development of a voluntary Code of Practice and streaming processes for dispute resolution.
6. A focus is being placed on improving processes such as third-party authorisation, debt repayment offers, referrals, and communication standards to reduce friction in sector-debt advice interactions.
7. Stakeholder engagement involves sector-wide collaboration including regulators, the Money and Pensions Service, and energy suppliers to address verification and prioritisation barriers.
8. Energy UK’s commitment via its Vulnerability Strategy emphasises stakeholder collaboration to improve support for customers in debt or at risk of incurring debt.
9. The concept of Consumer Outcomes is central, aiming to place consumers’ needs at the heart of service delivery, especially for those in vulnerable situations.
10. There is a push towards standardising authorisation processes for debt advice representation and improving referral pathways to independent, free debt advice.
11. Enhanced record-keeping and communication practices are targeted to minimise repetition and improve customer experience during debt management processes.
12. Ofgem plans ongoing monitoring and engagement, recognising that collaborative industry effort is essential to achieving meaningful improvements in outcomes for consumers in debt.

Key Statistics

• Three-quarters of the value of current energy debt is with customers who have no repayment plan in place.
• Consumers with the highest level of financial vulnerability are more likely to contact debt advice charities than the average.
• Customer satisfaction with energy suppliers is 71% overall, but drops to 88% among those who are ‘doing well’, compared to lower satisfaction among ‘highly financially vulnerable’ groups.
• Independent research indicates that energy sector interaction with debt advisers is viewed as more difficult than in the financial services sector.

Key Discussion Points

• The significance of reaching households without repayment plans through improved sector engagement.
• The importance of supporting consumers who want to pay but need guidance to do so.
• Challenges faced by debt advice providers working with energy suppliers, especially regarding verification and prioritisation.
• The sector’s efforts in developing a voluntary Code of Practice to standardise cooperation, and the need for government and regulator facilitation.
• The role of Ofgem’s Focus Sessions and sampling exercises in advancing sector improvements.
• The strategic emphasis on embedding customer vulnerability considerations into sector operations.
• The development of specific consumer outcomes to enhance transparency and tailor support.
• The necessity for standardised third-party authorisation processes to enable efficient representation.
• The importance of proactive debt management offers aligned with evidence-based, empathetic customer support.
• The value of case studies and shared good practices in fostering sector-wide improvements.
• The ongoing need for collaborative efforts involving regulators, industry bodies, and stakeholders like MaPS and FCA.
• Future focus on refining referral pathways, communication, record-keeping, and process transparency to improve overall debt handling.

Document Description

This article provides an update from Ofgem on efforts to improve collaboration between energy suppliers and debt advice providers in support of consumers facing energy debt. It details sector challenges, ongoing initiatives—including the development of standards, processes, and stakeholder engagement—and outlines strategic steps aimed at enhancing service quality, consumer outcomes, and support for vulnerable households. The focus is on reducing sector friction, promoting best practices, and fostering a more consumer-centred approach in managing energy debt.