Step-change: energy customers in vulnerable situations

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Meghna Tewari

Meghna Tewari

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Supply and Retail Market

We want to see a step change in the way the energy industry thinks about consumers who are in vulnerable situations, moving away from a box-ticking approach to ensuring that considering the needs of these consumers is engrained in everything suppliers do. That’s why we’re proposing to introduce a ‘vulnerability principle’ into domestic suppliers’ licences, which makes it clear they have a special responsibility to these customers. It would require them to improve how they identify these customers, and make sure they consider their needs.

One of Ofgem’s priorities is to protect and empower consumers who are in vulnerable situations. Vulnerability comes in many forms. We are very clear that the circumstances that can put people at a disadvantage – for example, the ability to read and write,  disability, mental illness, financial crisis or sudden bereavement – vary as much as the consumers themselves.

Domestic customers are already protected by our ‘Standards of Conduct’, which oblige energy companies to treat all their customers fairly. In addition, suppliers must follow some specific rules that protect customers who are in vulnerable situations. Suppliers mustn’t, for example, disconnect elderly customers in winter. And when it comes to debt, suppliers must do their best to establish what’s affordable for customers to re-pay and then offer them a tailored debt repayment plan.

Despite this, we continue to see worrying signs that many of these customers are struggling to pay their energy bills and manage day-to-day interactions with their supplier.

Last year, over a million gas and 1.2 million electricity customers were in debt to their supplier. Whilst the number of customers in debt is falling slightly, the average debt grew from around £450 in 2012 to around £600 in 2015.

Customers in vulnerable situations often slip through the net because suppliers simply don’t anticipate what they need or adapt their processes accordingly. One elderly man, who is not online, reported that he could not register a complaint because his supplier only accepted complaints via its website. Incidents such as these show a poor understanding of rules and exclude these customers.

With over fifty suppliers now in the market and technology constantly evolving, there will be ever more products and services for consumers to choose from. We want customers in vulnerable situations to be able to benefit from these new opportunities.

We are proposing to introduce an overarching ‘vulnerability principle’ into our domestic Standards of Conduct. This sets out our expectation that suppliers must act to with a view to ensuring no customer is disadvantaged or receives a worse service due to being in a vulnerable situation. 

Firstly, we propose to update our domestic Standards of Conduct to be very clear that ‘treating customers fairly’ includes customers in vulnerable situations.

Secondly, we propose require suppliers to put in place robust processes to identify and support these customers, and to make sure they review and keep them up-to-date and fit for purpose.

We are clear, we will take enforcement action under our Standards of Conduct when we need to.

This approach is intended to motivate companies to be more inclusive of these customers in the design and delivery of their products and services. This will incentivise companies to genuinely understand and act on their customers’ individual needs. It gives them the freedom to be flexible and innovate. It’s in their business interests to do so, and will help to build a trusted brand.

We are already seeing some suppliers leading the way. One not-for-profit company is already offering cheaper tariffs to help tackle fuel poverty. Another larger supplier is striving to achieve ‘Kitemark’ accreditation for Inclusive Services with The British Standards Institution. In future, consumer groups may recommend suppliers based on how well they serve consumers in vulnerable situations.

Ultimately, we want to make sure that our rules effectively protect and empower consumers in vulnerable situations now and in the future.