Utilities Suppliers: Do Credit Reference Agencies have a role to play to enable you to better support vulnerable customers?

I recently had the privilege of speaking at the Credit Strategies’ Collections and Vulnerability Summit. What is heartening, both at the conference and in the weeks that have passed, is the prevalence of discussions about supporting, protecting and enabling customers to engage with the utilities markets when they find themselves in vulnerable circumstances.  Not a day goes by without a call or meeting where I or my colleagues are providing practical advice on the use of data and technology to meet the diverse needs of vulnerable customers or those at risk of becoming so.

Defining Consumer Vulnerability


Identifying Vulnerability and Financial Vulnerability

Traditionally, Credit Reference Agencies’ (CRAs) homeland has been in the provision and use of credit commitment and payment data to enable organisations to make responsible lending decisions. This lends itself to the identification of financial vulnerability which is vitally important when we consider that 4.1 million people in the UK are in financial difficulty [1]. Given 1 in 8 water customers consider their water charges are unaffordable [2] and the sharp rise (8-10% last year) of energy customers in debt with no repayment plans, Ofgem and Ofwat have also moved this topic centre stage. Ofgem think suppliers should do more [3]. Experian explores financial vulnerability in detail in the following paper.

However, supporting  vulnerable customers is wider than just financial vulnerability. Ofgem cite several factors that may put consumers at greater risk of detriment than others, such as, cognitive impairment, not speaking English as a first language or not having access to the internet.  Statistics emerge, daily, to remind us of the challenge:



Therefore, my question is: Do CRAs have a role to play to enable utilities suppliers better support their customers in vulnerable circumstances?

Undoubtedly, the Priority Services Register (PSR) plays a key role in the utilities industry’s data driven approach to their vulnerability strategies. It will be interesting to see how the recent pilot involving sharing this register between United Utilities and Electricity North West is rolled out in 2020 [4].  However, the PSR alone does not provide the full picture because a person may be in a vulnerable situation but not require priority services. Organisations must, therefore, hold more (accurate) data internally on customers and use this to tailor their approach beyond the PSR. Core aspects feature heavily in Ofgem’s Vulnerability Strategy 2025 [5]. For example, ‘Improving identification of vulnerability and smart use of data’ has emerged as one of 5 key themes.

In answer to the main question, you don’t have to look far to see there are several publicly available examples to demonstrate how CRAs have already played a key role in enabling organisations to better support vulnerable customers (including financial and wider vulnerabilities):

  • Ofgem and Ofwat’s UKRN forum details a practical example of the use of Experian data to improve quality and fill data gaps in their 2018 report, “Making better use of data to identify customers in vulnerable situations[6];
  • A Practitioners’ pack for water companies from Ofwat’s vulnerability focus report also cites the use of Experian data to build a vulnerability scorecard[7];
  • Northern Powergrid cite a 27% increase in the identification of vulnerable customers using Experian’s data services to identify geographical areas likely to contain high concentrations of vulnerable consumers.[8]

Consumer Vulnerability: Challenges and Potential Solutions

Therefore, CRAs clearly have a role to play to enable Utilities better support vulnerable customers. Based on the advice and discussions our consultants have been providing recently, here’s 5 ways Experian can help you with your vulnerability strategy.

1.Data quality

Ofgem recognise the importance of data quality in their Vulnerability Strategy 2025 in which they say, ‘Robust systems and approaches to target support rely on proper identification and good quality data’ [5]  Understanding the quality of your customer data is a key first step and a data health check can be a good place to start.

 Filling Data Gaps. One interesting difference between utilities suppliers and financial services is the importance placed on verifying customers’ identities, which is only a requirement in the latter. I think this poses an interesting dynamic to utilities who are challenged to proactively identify vulnerabilities. For example, the customer bases of utilities suppliers often suffer from;

A lack of population of date of birth information: I will leave the question of what constitutes vulnerability to the regulators. However, taking their steer, age can form a component that can put a consumer at greater risk of detriment, an area where Ofwat have cited Experian’s service as an example of best practise [6]. In this case study an Energy Supplier used Experian’s services to fill data gaps and verify customer eligibility for a discount scheme aimed at preventing winter deaths for vulnerable customers. The scheme received ‘unanimously positive feedback’ with an 80% response rate to the initial contact.

Not knowing who lives at an address: This results in generic correspondence being directed to ‘the occupier’. By filling this data gap suppliers can personalise communications and, in turn, identify more customers with vulnerabilities.


2. Single customer view (SCV)

If organisations do not understand when they have multiple records on their database which relate to the same customer, then they could be missing vital opportunities to support their most vulnerable customers.

For example, research by Britain Thinks, on behalf of Citizens Advice Bureau, describes how consumers suffering with mental health problems, ‘Can go through periods in which they will totally disengage with their providers and essential service accounts’[9].  Imagine a customer who has reluctantly and, prior to such a period, informed their utility supplier of their mental health difficulties. The supplier has completed their priority services register for the account and appropriate processes ensue to enable support. However, if the customer has other accounts with the supplier, perhaps from a previous address, without the use of a single customer view (i.e. a key to enable linking of customer records that belong to the same consumer), the customer could foreseeably be on the end of inappropriate debt collection or enforcement activity on their other accounts. This could easily exacerbate the customer’s condition.  The use of a SCV service can enable you to link records to truly identify customers.


3. Data enhancement

CRA’s core competencies lie in the data we hold to identify consumers currently experiencing or at risk of, financial stress. I’ve already written a blog Data Sharing in Utilities which describes how adoption falls well behind other industries and how this practice is fundamental to holistically improving the outcomes for financially vulnerable customers.

Experian have also worked with several organisations in the utilities sector to understand and map areas in the UK with high concentrations of vulnerability.[10] Categories included in this data are; health, rurality / accessibility, children, communication etc. This is extremely interesting as it has been used to make practical considerations regarding provision and prioritisation of essential services.


4. Decisioning

Arguably the most important part in supporting vulnerable customers is having a customer first culture in which, once a vulnerability has been identified, subsequent interactions are consistently applied across all touchpoints. ‘Consistency’ features heavily in most discussions and regulatory guidance as typified by Ofgem’s guest blog, ‘Consistency is needed to benefit vulnerable customers[11]’.

Decisioning technology is widely used in the financial services sector but is only an emerging trend within utilities. It has been used historically to enable organisations to implement consistent customer strategies, primarily for debt collection and arrears prevention. However, as it is designed to tailor strategies for different customer segments it is ideally suited to ensure appropriate strategies are applied consistently for vulnerable customers. It should also ensure MI and audit data is automatically delivered to track volumes, engagement and effectiveness.


5. Open banking for Personalised Payment Plans

The U&T conference featured a session on Open Banking and how this could be an exciting area to support some vulnerable customers and help address the growing debt concerns in this sector. The financial services sector is making good progress but, again, the Utilities sector is slower to adopt. The technology could support specific customer segments in vulnerable situations who are, for example, reluctant or unable to easily engage in traditional conversations. The technology is extremely easy to implement and puts the control and consent of data entirely in the consumers’ hands. Experian would love to work with a utilities partner to understand this opportunity to see how, for example, the technology could be used, once consumer consent has been understood, to fully understand their spending patterns and determine a truly affordable, personalised, payment plan or to determine eligibility for various financial assistance schemes.


 

[1] https://www.fca.org.uk/publication/research/financial-lives-consumers-across-uk.pdf

[2] https://www.ccwater.org.uk/wp-content/uploads/2019/10/Water-for-All-2019-FINAL.pdf

[3] https://www.ofgem.gov.uk/publications-and-updates/vulnerable-consumers-get-more-help-suppliers-not-doing-enough-help-manage-debt

[4] https://utilityweek.co.uk/flex-quarterly-supplement-oct-dec-2019-data/

[5] https://www.ofgem.gov.uk/publications-and-updates/consumer-vulnerability-strategy-2025

[6] https://www.ukrn.org.uk/wp-content/uploads/2018/06/Making-better-use-of-data-identifying-customers-in-vulnerable-situations.pdf

[7] https://www.ofwat.gov.uk/wp-content/uploads/2017/03/Preparing-for-market-opening-in-the-water-industry-speech-by-John-Russell-at-Utility-Week-Consumer-Debt-Conference.pdf

[8] https://www.northernpowergrid.com/asset/0/document/5150.pdf and https://www.northernpowergrid.com/asset/0/document/4136.pdf

[9] https://www.citizensadvice.org.uk/about-us/policy/policy-research-topics/consumer-policy-research/consumer-policy-research/essential-service-markets-and-people-with-mental-health-problems/

[10] https://www.northernpowergrid.com/asset/0/document/4136.pdf

[11] https://www.ofgem.gov.uk/news-blog/our-blog/consistency-needed-benefit-vulnerable-consumers