Ofgem: More debt help needed for vulnerable energy customers

Electricity and gas customers received more than 850,000 and 650,000 free services respectively in 2018, through their priority service registers. Those figures represent an 8.5 percent increase for electricity and 4.4 percent rise for gas services from the previous year.

These customers were given additional support to help them manage their energy day to day, for example through braille or large print bills for visually impaired people.

The number of disconnections for debt also fell to a record low last year, with just six electricity disconnections and no gas disconnections. The number of prepayment meters installed forcibly by suppliers under warrant to collect a debt fell by 15 percent to 71,000 in 2018, after Ofgem introduced rules to cut down on this practice.

Much of that drop was attributed to British Gas, which worked closely with Ofgem on the rules.

However, Ofgem highlighted a “high number of forcible meter installations” carried out by First Utility (now Shell Energy) and Utility Warehouse in 2018. First Utility did not carry out any forcible installations in the final quarter of last year, and Shell has pledged to improve performance.

However, there was more than a threefold rise in the number of smart meters switched remotely by suppliers from credit to prepayment mode to repay a debt – from 21,000 in 2017 to 70,000 in 2018.

Energy suppliers are required by Ofgem’s rules to only install prepayment meters to collect debt where they have checked that it is appropriate for customers to pay by this method. Installing meters by force must be a last resort for suppliers.

Ofgem said it harbours concerns that some suppliers may be remotely switching smart meters to prepayment mode to collect debt inappropriately and without the customer’s active choice.

Mary Starks, executive director for consumers and markets at Ofgem said: “We are pleased that suppliers are making such good progress on getting extra help to vulnerable customers that need it, for example by making their bills easier to access or read.

“However, some suppliers are simply not keeping up with the rising numbers of customers who owe them money. It’s imperative that suppliers move quickly and efficiently to help struggling customers manage paying back their debts, or risk pushing them further into hardship.”

Ofgem’s assessment comes as charity Citizens Advice published findings noting there is still a substantial gap between the best and worst standards of customer care among energy companies.

Among the common issues the charity identified, customers reported experiencing difficulties around debt and disconnections, including aggressive debt collection practices.

Problems with prepayment meters, including credit refunds were also reported, while customers also highlighted billing issues, such as incorrect and late final bills, not receiving any bills and inaccurate bills.

Metering issues including faulty meters and incorrect numbers registered to property were also found.

Gillian Guy, chief executive of Citizens Advice, said: “There is still a big gap between those firms who provide an excellent service to consumers, and those who are letting people down.

“Attention-grabbing low tariffs can be a good deal, but we recommend looking deeper than just the headline price when shopping around for the best energy deals.

“We’ve seen six energy suppliers go bust this year. In our experience, when a company is struggling, customer service is often the first thing to suffer.”

Credit Strategy’s Collections & Vulnerability Summit takes place on October 16 in Manchester. Visit its site to view the agenda and book your place.