Using alternative branding to communicate with indebted customers
Correspondence and other
Publication date
Industry sector
Supply and Retail Market
Energy companies are required to treat indebted energy customers appropriately. Customers must not be misled, pressured or scared into making payments they cannot afford.
We have recently reviewed companies’ use of alternative branding to communicate with indebted customers, that is where correspondence is branded (for example on a letter head) with a name that is different from the name of the energy supplier, implying that it comes from a different organisation. We found that while this practice was once widespread, with a number of suppliers using this approach until relatively recently, only one supplier continues to use an alternative brand. Another supplier still uses a subsidiary of its parent company to collect debt.
Debt approaches across all sectors involve trying to draw consumers’ attention to the money owed, and this communication is typically escalated as time goes by. We do not dispute suppliers’ right to seek timely payment by consumers, which is in consumers’ interests too. However is it imperative that all communication relating to debt passes three tests:
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Is it obvious who the communication is from?
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Is it clear whether or not a new stage has been reached in the debt collection process, and the implications of this, and is this communicated in a way that does not promote fear?
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Does the communication comply with our rules on Ability to Pay?
We have seen a wide range of practices by suppliers, a substantial number of which do not fully pass the three tests set out above. In particular, some branding or detailed wording implies that the case has been passed to a separate debt collection agency when it has not, and that a new stage of the debt collection process has been reached, with more serious implications. Not all communications reflected Ability to Pay obligations. Most of these unacceptable practices have now changed, but we want to make very clear our view that they must not recur.
Any activity that attempts to mislead customers is not consistent with attempts to rebuild trust in the industry. Some of this is about compliance, and we plan to include our findings on Ability to Pay within a wider review which could result in enforcement action, but it is not just about companies acting within the law and our rules. They must also meet or exceed the standards expected of them by their own customers and the public more generally.
We have published an open letter which provides further detail of our findings and sets out our expectations of energy companies’ debt collection communications and our next steps.