Regulatory update: The Commission for Customers in Vulnerable Circumstances Final Report 2019

Posted: 4th June 2019

Background

In 2018, Energy UK – the energy industry's trade association – launched the Commission for Customers in Vulnerable Circumstances, a body with the purpose of exploring how energy firms can deliver better services to customers in vulnerable circumstances.

On the 31st May, the Commission published a “Final Report”, the culmination of a year’s worth of evidence gathering and interviews with stakeholders across the country. The report presents findings from the investigation and delivers practical guidance that could drive better outcomes for vulnerable customers.

Lord Whitty, the Chair of the Commission, prefaces the report by noting the particular challenges faced by suppliers, namely the challenge of correctly identifying vulnerability at the outset and ensuring equity in energy supply and service:

“A safe, reliable and affordable energy supply for every household is one of the fundamentals of a modern society.

“This basic requirement should be enjoyed by everyone, and that means taking special care to make sure that we address the needs of vulnerable families and individuals. Nobody likes to be thought of as “vulnerable” but in reality, thousands of us are. Vulnerability is multi-faceted and caused by many problems – financial, age, physical and mental medical conditions, as well as arising from locational or legal issues.

"Vulnerability may be long term and permanent - or temporary and intermittent, caused by life events such as losing a job, separation, bereavement, illness or accident. But a service which is universal has to be effective in meeting the needs of all citizens, including those in vulnerable circumstances, and be able to communicate with them and respond to their needs, concerns and complaints.”

Through a combination of evidence hearings, responses to a “call for evidence”, review of published research and further interviews with experts within the field, the commissioners identified seven key outcomes and recommendations that would be required to improve the experience of customers in vulnerable circumstances. Overall, the Commission suggests there is an urgent need for improvements across the sector.

According to the Commission, vulnerable customers need:

An end to inadequate and inconsistent service

The Commission regards the current performance of the sector as “inadequate and inconsistent”, stating that while there are examples of good practice, there are far too many examples of poor treatment of customers in vulnerable circumstances.

As a starting point, the Commission suggests that energy suppliers adopt a new, independently monitored code of conduct, driving up the standards of service and support.

A comprehensive regulatory framework with timely support and protection

The Commission suggests that Ofgem’s approach to ensuring compliance needs to be “more robust”. In one case identified in the research, fewer than 3% of a supplier’s vulnerable customers in debt were offered any sort of help.

It was also found that there are significant gaps in regulatory protections across energy markets. For example, there is little regulation of heat networks and little oversight of price comparison websites, meaning that customers could be led to make ill-informed decisions when it comes to switching.

The report calls on Ofgem to ensure licence conditions are clear, effectively communicated and regularly monitored. Breaches of these conditions should be met with more “deterrent penalties”.

Easy identification of needs and access to support from energy suppliers

It stands to reason that customers should be able to easily provide information about vulnerabilities and be given support off the back of this self-identification. The report states that eight out of ten customers would not tell their company they were in a potentially vulnerable situation.

It needs be asked: why don’t customers feel comfortable doing this? Are there even avenues open to allow for this kind of reporting? Suppliers must reduce the barriers to customer disclosure, and ensure front-line teams have the proper support and training to deal with this.

A range of options to communicate with their supplier

Continuing on the theme of communication, the Commission highlights a need for communication channels to be more suitable for customer needs. With only four in ten people over 65 using the internet in the UK (according to Age UK) and 72% of people experiencing poor mental health feeling anxious about speaking over the phone, firms need to take an omni-channel approach to consumer communications or risk losing contact with large groups.

Effective links between suppliers and support organisations

Third-party organisations can help firms and their customers to deliver support and advocacy, but charities and similar organisations rarely have the resource capacity to be effective and lack the established partnerships needed to provide their services.

The Commission suggests establishing a sector-wide framework to “facilitate easier partnerships between suppliers, charities and other third-party organisations.”

A smart energy system that works for and benefits customers in vulnerable circumstances

Technology should make life easier for all of us, but all too often it can leave people ‘out of the loop’ and vulnerable. The rollout of smart meters to houses across the country should be undergirded by a deep understanding of how vulnerable customers can access, use and benefit from smart technologies. Firms need to ensure that any technology employed on a large scale needs to be accessible to all and closely monitored.

Affordability

Energy costs have long been a source of strain for vulnerable customers and households at the lower end of the income scale. As millions of households across the UK struggle to afford the necessities, the Commission calls for “concerted action to tackle the root causes of poverty” in the country.

The report calls on suppliers and Government to recognise the “realities of affordability, fuel poverty and indebtedness” and should take proactive and positive measures to ensure that vulnerable customers are not pushed further into insecure and dangerous positions by accessing essential services.

Next steps

The Commission published a press release alongside the final report that called for urgent action from all companies, regulators and government.

Among other suggestions, the Commission would like to see suppliers adopt an independently monitored Code of Conduct that would drive up standards of customer support. Energy UK will surely be working with stakeholders to drive this project forward. The body will also guide suppliers in the creation of a new voluntary “Vulnerability Charter”.

Our Sector Lead, Utilities, Alex Prentice recently spoke to Utility Week on the topic of this report, calling for further action to prevent vulnerable customers 'slipping through the cracks'. You can read his response here.