Energy price cap rise: Why firms must take action now to improve debt communications

News this week that the energy price cap will rise from the start of October is particularly concerning as the timing coincides with the move into winter, the planned cut to Universal Credit and the winding down of the furlough scheme, putting pressure on households who are already struggling.

Citizens Advice has warned that almost 2 million households were already behind on paying their energy bills, even before the new price rise and planned Universal Credit cut. This means we are going to see more and more households struggling to pay their energy bills and falling into debt with their energy supplier.

Much has been said to encourage consumers to switch to fixed rate tariff deals, which is good advice, but we know many people with mental health problems will find this challenging. Common mental health symptoms like poor memory and concentration, low energy levels or feelings of anxiety can make engaging with essential services a stressful, sometimes overwhelming task. And for those on prepayment meters, switching to a fixed rate or new provider is often not an easy option.

This is why the onus of change should not just be on consumers, energy suppliers need to be prepared to deal with increasing numbers of customers in debt. Jonathan Brearley, the Chief Executive of Ofgem, shared a similar view last week when he said, “My message to energy companies is clear – you need to provide all available help and support to customers who are struggling as a result of this price change.”

At present, when companies communicate to customers that they’ve missed a payment or are in debt, their communications will often intimidate, distress, and drive fear.

Part of this is down to what companies must legally include in debt notifications, but there are many improvements companies could make to minimise distress and maximise help-seeking behaviour. Notifying customers of debt in a way that makes the next steps easy to understand, and the available options of support the company could offer, will encourage customers to act – which is good for both the customer and the company.

More than 420,000 people in problem debt consider taking their own life in England each year, and more than 100,000 people in debt actually attempt suicide. Sudden triggers like the intimidating and threatening letters people receive from lenders can put people at risk of becoming suicidal.

Our ask to energy suppliers is to examine how they communicate with their customers in debt now, before these changes come into place. 

Companies should ask themselves:      

• How do we inform customers of debt?
• Do we do this via more than one channel?
• Are our messages clear and easy to understand?
• Do our messages and the information on our website signpost to support?
• Will our messages inform and equip vulnerable customers with what they need so they feel prepared to make contact?

We also encourage companies to consider incorporating the voice of lived experience into the design of their messages to get first hand feedback on how their communication would make a customer feel.

Money and Mental Health runs a debt communications consultancy programme, where we work with essential service providers like energy suppliers, to help make improvements on how they communicate with their customers in debt. We also give them feedback directly from customers with mental health problems on how their current communications make them feel. The goal of this work with companies is to improve communications, so that they minimise distress and maximise help-seeking behaviour. As a result, we hope customers will be less fearful about getting in touch and better prepared for these difficult conversations.

If you would like to find out more about how we could work with you to make changes, please get in touch: [email protected]