Utility Week

UTILITY WEEK | FEBRUARY 2021 | 29 Customers get smarter here. Data protection is an issue, but can we get smarter at sharing informa- tion about nancially vulnerable people?" Moving beyond the emotive discussion of consumers in severe nancial distress, the group agreed that there may be a larger if less extreme problem emerging for collections departments across the industry in the build up of arrears from "good customers" who moved to trim their outgoings during the rst national lockdown and whose consumption is now regularly outstripping their payments. "We've been tracking customer reduc- ing their direct debits," observed one energy sector participant. "We see a widening gap between the amount customers are request- ing to pay and their usage… we're building up a blob of customers that have been hid- den because they haven't cancelled their direct debit – and they're good customers – but actually they are underpaying. There's a big risk in that space." Other attendees agreed with this experience and sentiment. The prospect of widespread bill shocks for consumers in this scenario is clear – as is the likelihood of a related backlash from the public and consumer advocacy groups like Citizens Advice. Regulatory schizophrenia It's an outlook participants viewed with a weary sense of inevitability, and without much hope that their need to collect payment for services rendered will be championed by their regulators. Multiple representa- tives from both the energy and water sectors expressed a view that Ofgem and Ofwat have exhibited "split personalities" when it comes to acknowledging the right of companies to pursue collections, and the reality that this challenge is exponentially increasing in scale, sensitivity and complexity in the cur- rent environment. One energy sector representative said this approach is creating "moral hazard" in so much as "less honourable" players are gaining commercially while others who have moved to o† er more fulsome and higher cost- to-serve support for consumers are disadvan- taged – and that this incurs costs. More broadly, participants called for acknowledgement from a policy perspective of the increasingly exposed problem that exists with the way we currently socialise the cost of supporting those who are unable to pay for their essential services. Several agreed that one helpful action would be to make changes to the bene ts system so that utilities payments are deducted prior to funds landing with individuals. Jane Gray, content director "There needs to be industry- wide innovation and coordination around how to handle the burden of non- payment better." Opinion James Towner Senior vice president, energy and utilities, WNS T he year 2020 was without doubt one of the most chal- lenging years for companies in the energy and water sectors as they had to cope with the com- plexity of Covid 19 on their opera- tions and customers. Balancing the needs of private enterprises to deliver a pro t with regulatory requirements and supporting vulnerable customers has always been a challenge. But 2020 put real strain on this balancing act and the tension continues to build. The situation during the rst national lockdown within the UK led to an unprecedented spike in custom- ers seeking help or taking action to trim their outgoings, for exam- ple by cancelling or reducing direct debits. This spike appears to have settled, with direct debit cancellations at near normal levels, but there is genuine con- cern from all sectors that the real economic impact on people has yet to be felt and that a longer tail is going to be seen. In this context, our discus- sion highlighted a growing worry about those customers in very severe nancial distress who don't approach their utilities to ask about options to delay or reduce their bill payments – despite the e† orts of utilities to make these opportunities visible. While customers not making contact is frustrating and wor- rying in equal measure, it is not necessarily a surprise. Customers just don't expect to ask for help from their energy or water supplier in the way they may approach their bank, for example. The issue of supporting customers who cannot pay is not new but it has been exacerbated by coronavirus and the challenge is now certainly bigger than any one com- pany, or indeed sector. There is a strong feeling there needs to be industry-wide innovation and coordination around how to handle the burden of non-payment bet- ter. Meanwhile, our participants were clear they would also welcome a refreshed and more thoughtful approach from regulators on how to understand and accommo- date this growing problem area. This need for innovation and fresh thinking is all the more urgent in light of the ght to combat climate change. How will we ensure no customer is le" behind as we act to create our sustainable, net zero future? in association with "Customers just don't expect to ask for help from their energy or water supplier in the way they may approach their bank" Key talking points There is a continuing chal- lenge around connecting with customers in the most vulnerable circumstances. Those most in need are hardest to reach and overwhelmingly unlikely to seek help. The importance of strategic working with third parties has become heightened. In some cases they can take on aspects of the repay- ments process, as well as playing the role of trusted intermediary and connect- ing individuals with support available from utilities. There is a common concern that a pause in collections during the fi rst national lockdown still has a tail end in terms of debt challenges for utilities which has not hit home yet. For some, the hia- tus has meant teams have found it harder to establish productive communications with customers about their need to repay. There is a concern that customers who took steps to trim their outgoings – perhaps by reducing direct debit payments on their util- ity bills – in the fi rst national lockdown may be storing up bill shock and creating a collections burden further down the line. There is a common percep- tion that regulators have "split personalities" when it comes to the issue of consumer debt. There is concern about the lack of any satisfactory answer to the problem of socialis- ing the cost of supporting customers who are unable to pay for essential services.

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