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28 | 31ST MARCH - 6TH APRIL 2017 | UTILITY WEEK Customers Event Consumer Debt Conference Birmingham, 16 March 2017 Strategies for bad debt must recognise its transient nature Utilities must examine the way they communicate with consumers, capture data and collaborate with others to help customers regain financial equilibrium – and thus earn their loyalty, says Jane Gray. D ebt is a growing macroeconomic problem. As government reforms to the welfare system take hold and political uncertainty filters through into seemingly relentless inflationary pressure on living costs, more and more households are feeling a squeeze on their ability to pay for essential goods and services. This is a big problem for utilities who need to find new and more effective ways of man- aging bad debt in order to survive – but who will need to overcome major issues relating to public trust and data handling to do so. These were the problems pondered by collections and customer care professionals at Utility Week's Consumer Debt Conference on 16 March. The event, sponsored by credit management specialist Arum, provided insight into the underlying social and eco- nomic trends driving consumer debt in the UK. It also highlighted how utility regulators are responding to these developments and identified industry best practice in tackling debt, via process innovations and the intro- duction of powerful new approaches to data segmentation and analysis. Perhaps the overriding message from conference speakers was that strategies for tackling bad debt must recognise its tran- sient and unpredictable nature. Financial vulnerability is not a permanent state, but a condition that can arise for any consumer as a consequence of unforeseen and complex events in their lives, they said. This being the case, there is great scope for utilities to think laterally about the way they communicate with consumers, capture data and collaborate with other organisa- tions to build more robust pictures of their customers' ability to pay – and to help cus- tomers regain financial equilibrium in a way that will build loyalty. Simple steps, such as bringing billing and collections teams together, can reap big ben- efits, delegates were told. And looking to the future, integrating debt management into plans to utilise smart meter data could ena- ble great leaps in proactive debt prevention and mitigation, it was suggested. Opening up the full potential of consumer data will not be without its challenges, however. Utilities face well-documented consumer trust issues, which mean access to and use of data remains a thorny issue. Meanwhile, laws around the sharing of con- sumer data between organisations are about to become a great deal more prescriptive. Multiple speakers sounded alarm bells about the arrival of the General Data Protec- tion Regulation (GDPR) 2018 and the impact it will have on the ability or willingness of utilities to be innovative in their use of data. The regulations will introduce stringent new rules regarding data sharing and portability, as well as consumer access rights. Penalties for breaches will be brutally punitive and may make it "too hard" for utilities to build a detailed understanding of "transient vulner- ability" said one expert. Notwithstanding this challenge, speak- ers from Ofwat and Ofgem made it clear that debt management practices will come under increasing scrutiny, for both price-regulated utilities and competitive retailers. Innovation to reduce the levels of bad debt carried by the sector will be expected.