Lowell’s utilities sector Client Operations Manager, Dan Cheesbrough, considers the evolving role and relevance of customer experience for debt resolution specialists, and the potential impact of OFGEM’s Consumer Vulnerability Strategy and the Commission for Customers in Vulnerable Circumstances report.
From my experience working in Lowell’s utilities sector team, I’ve seen a noticeable conversation change regarding the importance of customer experience in debt management. This includes the tone of voice we use within our Notice of Assignment letters when we acquire accounts, and a convergence of practices between Lowell and our partners in how we service customers post-acquisition.
What we’ve also seen is a move to not selling those accounts where there are acute issues and sale would simply shift ownership. Instead we are seeing providers retain those accounts and work with customers towards resolving the issue, whether it be personal circumstances or previously poor journey. The debt resolution options now being discussed demonstrate a clear recognition that customer circumstance is rapidly becoming a key driver for how a customer is supported.
Before we make any new portfolio acquisition, we closely examine what the underlying data is telling us, and what that informs us about likely circumstances or customer servicing needs. Key indicators such as pay-as- you-go or pre-payment tariff options point to customers having some degree of vulnerability, be that financial, which led to the provider moving them to this means of payment, or an inability to understand their bills, their consumption and the cost of their usage.
The use of strategies, such as pre-payment meters, have been used largely to cap the supplier’s risk. However, how much does it support the rehabilitation of customers? Do these potentially vulnerable customers understand the split between how much of their payment is going towards clearing their historic debt and how much is being used against go forward supply?
Could future supply be managed more effectively on a pre-payment scheme, or via regular use of a smart meter, whilst the historic balance repaid over a longer period at a manageable rate for the customer? Energy companies are unlikely to have built their operating model around such a payback period, but for Lowell, whose business model is built around supporting longer collection cycles, we are extremely well placed to manage that particular customer circumstance.
It’s interesting to note the Commission for Customers in Vulnerable Circumstances Report effectively sets out the challenging social and economic backdrop for energy customers in vulnerable circumstances. “Societal changes in recent years have left millions of households across the UK struggling to afford their household bills. This issue has been exacerbated by the way the Government’s rollout of Universal Credit has been delivered. It is clear that a dramatic and sustainable improvement in the position of vulnerable energy customers will only come if there is also concerted action to tackle the root causes of poverty in Great Britain. Three million people are in severe financial difficulty, and people struggling with their household bills has become the ‘new normal’”.
Among the seven key themes identified by the Commission, ‘Affordable Energy Usage’ should be at the heart of processes designed to improve services for vulnerable consumers. It also states that, “Customers struggling to afford their household bills should receive both short-term help to manage periods of difficulty and a long-term sustainable solution to reduce their energy costs.” Additionally, their strategic recommendation includes the request that, “Suppliers should recognise the realities of affordability, fuel poverty and indebtedness and the positive impact they can make with help to manage debt.”
Here at Lowell, we have relationships with around one in five adults in the UK: every day we agree thousands of sustainable repayment solutions with our customers to meet their specific circumstances. We have millions of conversations annually with people in difficulty, it’s clear that across sectors simply talking about debt remains a barrier to getting the right help and support. In the utilities sector specifically, it’s clear that people share this fear and there is also a broad lack of understanding around bills and consumption.
Since moving into the energy sector, we have acquired over 1 million accounts from our existing Big 6 energy partners, observing, at first hand, many of the points raised in OFGEM’s Consumer Vulnerability Strategy. We understand that our responsibility as experts in our field is to work closely with our partners to evolve their resolution paths, and offer new options that are relevant to a customer’s circumstance.
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