Another great day with the Digital DRA team and operational leaders from across the energy industry… A lot of fun, and interesting alignment around some of the issues impacting the business
Key Take Aways
- UK domestic energy debt was reported at approximately £4.8 billion, with around three-quarters having no repayment arrangement in place; debt had continued to rise quarter-on-quarter since 2021.
- The growth in debt value appeared to be outpacing growth in customer numbers, suggesting that a significant part of the challenge was existing customers moving deeper into arrears, rather than simply more customers entering debt.
- One supplier reported that around 70% of customers currently in debt were also in debt a year earlier, reinforcing the persistence of a core cohort of customers with unresolved affordability challenges.
- Payment arrangements did not necessarily equate to debt resolution: customers could be maintaining current consumption while their historic balance remained broadly unchanged or continued to increase.
- Average energy debt of around £1,400 per customer was approaching the scale of the cited annual price cap of approximately £1,600, placing significant pressure on customers’ capacity to repay arrears alongside ongoing consumption.
- Change of tenancy represented a material component of the debt challenge, with the discussion referencing approximately one-third of debt as connected with change-of-tenancy issues.
- A digital-first early-arrears operating model demonstrated that collections could move away from headcount-led, telephone-centric BPO models towards integrated self-service without removing human escalation routes.
- The Digital DRA case study reported 61% digital engagement, with 87% of digitally engaged customers subsequently taking an action through self-service and more than £8 million in actual payments collected during the period discussed.
- Integration was presented as a critical enabler rather than an optional technical layer: payments, balances, communications and customer actions needed to move between supplier and partner systems in near-real time.
- Collections journeys were increasingly being designed to address both historic arrears and future affordability, including affordability checks, payment arrangements and adjustment of direct debits to cover ongoing consumption.
- Vulnerability labels alone were considered too broad for effective treatment design; participants argued for more granular segmentation based on the customer’s actual circumstances, needs and ability to pay.
- The discussion increasingly positioned successful debt collection as resolution and engagement rather than payment demand alone, including changing language, reducing fear and improving public understanding of the role of collection agencies.
Innovation
- Digital-first arrears journeys: replacing telephone-led early collections with branded digital engagement and self-service while retaining telephone and specialist escalation when required.
- White-labelled collections: Digital DRA digital journeys can appear as part of the supplier’s own customer experience rather than an obviously separate third-party collections process.
- Real-time webhooks: payment events can be sent immediately into the supplier’s systems, supported by reconciliation files and balance synchronisation.
- Integrated payment gateways: payments are routed through the supplier’s own payment infrastructure, reducing reconciliation complexity and avoiding the collections partner holding supplier funds.
- Dynamic customer journeys: portal content and available options could vary according to vulnerability markers, previous behaviour, segment and account history.
- Self-service affordability: customers could complete income and expenditure assessments, establish payment plans and subsequently revisit or amend arrangements.
- Direct-debit optimisation: collections journeys are extended beyond recovering arrears to increasing direct debits where necessary to cover ongoing consumption.
- Embedded debt resolution: a proposed model in which customers could be routed directly to the most appropriate external partner from within existing supplier or lender journeys when specific circumstances were identified.
- Utility-specific data platforms: data solutions were designed around property, occupancy, change of tenancy, goneaways, fraud and utility collections rather than adapting traditional lending-focused credit-reference structures.
- Centralised tenancy data exchange: Landlord Tap provided a common mechanism through which landlords and managing agents could provide tenancy changes once, with the information subsequently routed to the appropriate water company.
- Multi-source data matching: new datasets were continually being added to improve identification of occupants, property status and customer circumstances.
- Consumer-facing debt education: television, social media, community activity and a dedicated consumer brand were used to tackle fear, misinformation and avoidance around debt collection.
Key Statistics
- Approximately £4.8 billion of domestic energy debt was cited from Ofgem reporting.
- Around three-quarters of that debt was reported as having no repayment arrangement.
- Average debt per customer was approximately £1,400.
- The cited energy price cap was approximately £1,600.
- Around 2 million customers were described as being on repayment arrangements, compared with approximately 1.2 million at an earlier point.
- Energy debt was described as having increased by approximately 200%, without an equivalent 200% increase in customer volumes.
- Approximately one-third of debt was discussed as being associated with change-of-tenancy issues.
- One supplier reported that approximately 70% of customers currently in debt had also been in debt a year earlier.
- Digital engagement in the case study was 61%.
- 87% of those digitally engaged subsequently took an action through the self-service journey.
- Landlord Tap was reported as having approximately 140,000 landlords and agents interacting with the service, with all water companies in England and Wales contracting with the platform.
- Digital DRA debt-awareness television campaign ran for six weeks.
- The campaign was stated to have generated approximately 75 million viewing opportunities across around 1,000 adverts and reached more than 2 million people.
- A figure of approximately 50% of customers on the PSR was referenced during the vulnerability discussion.
- A fuel-poverty discussion referenced approximately £3 billion of estimated need against around £1 billion of funding, implying a roughly £2 billion gap.
Key Discussion Points
- Energy debt composition: participants challenged the usefulness of treating the £4.8 billion headline as a single homogeneous affordability problem and explored the underlying causes.
- Persistent arrears: a significant concern was customers remaining in debt for long periods and becoming progressively more indebted as ongoing consumption accumulated.
- Affordability versus repayment arrangements: having an arrangement did not necessarily mean a customer’s underlying debt position was improving.
- Change of tenancy: incorrect or incomplete identification of occupants and former occupants was identified as a major contributor to utility debt and operational cost.
- Customer segmentation: broad classifications such as vulnerability or PSR status were seen as insufficient to determine appropriate treatment without understanding individual needs and circumstances.
- Escalation and vulnerability: participants discussed circumstances where progressing customers into firmer collections or litigation journeys could create engagement and resolution rather than necessarily producing a poor customer outcome.
- Digital versus telephony: customers increasingly expected to manage debt through the same digital channels used for other aspects of their relationship with a supplier.
- Integration: digital collections worked most effectively when payments, balances, communications and customer servicing were genuinely integrated rather than added as a separate front end.
- Preventing repeat arrears: recovering historic balances without addressing ongoing consumption risked customers immediately rebuilding debt.
- Data quality and identity: property-based utilities required a different approach from traditional lending because suppliers continued servicing a property even after an individual moved.
- Engagement and language: collection communications could create fear before a conversation had begun; participants supported language focused on options, support and resolution rather than immediate payment demands.
- Industry perception: misinformation and negative perceptions of debt collection were seen as contributors to avoidance, making consumer education and community outreach part of the engagement strategy.
#DigitalDRA
RO-AR.com contact list
