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26 | 20th March - 2nd april 2015 | UtilitY WEEK Conference: Telecoms and Utilities Consumer Debt, 18 March, Birmingham Customers Debt gets personal Helping vulnerable customers stay out of debt is the right thing to do and makes sound economic sense. A s chancellor Osborne "walked tall" and spoke proudly in his Budget of improved living standards across the UK, delegates at Utility Week's Tel- ecoms and Utilities Consumer Debt Conference met to tackle the reality of rising debt from customers who are struggling to make ends meet. The event focused on two headline themes in consumer debt management – vulnerability and compliance. Presentations updated delegates on ongoing and upcoming changes to the regulatory landscape around the handling of consumer debt and collated varying perspectives on vulnerability. This latter topic sparked some strong debate. Several speakers and delegates expressed dissatisfaction about the consist- ency with which vulnerability is defined – particularly from a legal perspective. Vul- nerability means different things to different people and is a transitory state for many, they pointed out. Mike Fawcitt, a credit risk manager with Scottish Power, suggested that utilities could limit confusion over interpretations of vulnerability by limiting themselves to a consideration of financial vulnerability and not getting bogged down in wider social vulnerability. Building on discussion around vulner- ability, a representative from the Institute of Customer Service raised the significance of trust in mitigating consumer debt. A sensi- tive topic in the current climate, the implica- tions raised the hackles of some in the room and found support elsewhere. They created two camps: those concerned by the reality of current debt and its impact on utilities' bal- ance sheets, and those who felt that a more empathetic relationship with customers over the longer term would encourage custom- ers to proactively keep on top of bills in the longer term. Case study insights at the Telecoms and Utilities Consumer Debt Conference gave insight into transformation programmes at Centrica, Northumbrian Water, Scottish Power and Thames Water. The two water companies, in particular, emphasised the benefits that changes to con- sumer debt management have achieved in terms of reduced bad debt charges and cost to serve over the past two years. Both com- panies have introduced social tariffs that go above and beyond what is statutory and both said they had been able to help customers reduce their energy bills, as well as water bills, by encouraging water efficiency. With intense focus on utilities' (especially energy) relationships with consumers, there was widespread, though not unanimous, consensus that utilities should do more to help customers (we shouldn't call them debt- ors, it was suggested) manage their broader financial commitments. The help of third parties is crucial here, both in terms of sign- posting independent sources for financial advice, and in terms of educating debt col- lection agents so they are aware of the prod- ucts their utility partners offer to help those most in need. An increasingly empathetic approach to anticipating and assisting struggling custom- ers challenges many traditional approaches to debt collection and call centre processes. With Centrica's head of credit risk, Max Grif- fiths, encouraging peers to "give call agents the time they need to have the right conver- sation", several participants suggested that days are numbered for old-fashioned call scripts and focus on call volumes. However, with customer data in a questionable state, at best, across much of the industry and cost to serve under constant pressure, achieving truly individual treatment for every customer who might become vulnerable will be easier said than done. The self-employed Matthew Vaughan Wilson of the Money Advice Trust closed the day with a review of the particular difficulties faced by self- employed customers – a group that has significantly increased in size since the financial crisis. Outlining the main characteristics of the self- employed, Wilson said they were predominantly older males – though the number of women is increasing – who work in trade segments that are susceptible to economic fluctuation. They are also unlikely to have any financial safety net to help with unexpected bills, he added, with 91 per cent of self-employed people in the UK having no savings to speak of. As utilities increasingly look to find flexible and innovative methods of payment to reduce overall debt on their books, Wilson urged his audience to consider that customers with no regular income are unlikely to be able to keep up with regular payment plans in the long term. "But this does not mean that frameworks are impossible, or that they should not be considered," he concluded. Big Numbers • One in two people in the UK between 25 and 64 say they struggle to keep up with bills • Almost 9 million people in the UK are over-indebted • £55.5bn interest will be payable on personal debt this year – 4.31% of average pay • Someone becomes insolvent every 5 minutes 55 seconds, and a property is repossessed every 25 minutes