Giving more power to vulnerable customers - Ofgem's annual review

Last week Ofgem, the energy regulator, released its annual review of how vulnerable customers are faring in the energy market. The report sets out some of the positive steps that Ofgem has taken to improve the support offered to vulnerable consumers over the past year, and sends a clear message to firms of all sizes, that they need to take their responsibilities towards vulnerable customers seriously.

Each year Ofgem revisits key metrics, to track progress in how firms are treating vulnerable customers, and monitor changes in the market, which may require further action. The results are mixed, but in a few key areas it’s clear that brilliant progress has been made.

Last year only 14 electricity and three gas customers were disconnected by their suppliers because of debt, down markedly from thousands of customers annually just ten years ago. This demonstrates how quickly and significantly regulators can improve outcomes for vulnerable consumers, if they set out clear expectations for firms and commit to measuring progress.

We hope that nobody will be disconnected from these essential services due to a debt problem next year, and that Ofgem will take a similar approach to tackling other problems people face in the energy market, such as customers rationing their energy usage to save money. Recent research from Citizens Advice found that half (50%) of the 140,000 households who can’t afford to keep their prepayment meter topped up contain somebody with mental health problems.

Two changes in the last year should make a big difference for people with mental health problems in particular:

• Ofgem has introduced a “vulnerability principle” – requiring all firms to proactively identify and support their vulnerable customers. This is a welcome step, as many people with mental health problems currently don’t receive support that they’re entitled to, often due to a lack of awareness or because they don’t feel comfortable telling providers about their mental health

• Ofgem has banned firms from forcibly installing prepayment meters to recover debts from the most vulnerable consumers. Most of us would find it distressing for a stranger to forcibly enter our home and put up a meter, but for many people with mental health problems this experience can cause lasting psychological harm.

Despite all of this good work, some vulnerable customers are struggling to take advantage of options in the market and are paying expensive default rates for their energy. In the wake of increased competition, and as the market is becoming smarter and more digitised, Ofgem has reaffirmed its commitment to ensuring the market works for everyone, and that vulnerable customers aren’t left behind.

“We want to make sure the most disengaged and vulnerable consumers are adequately supported to engage in the market.”

Dermot Nolan – Chief Executive, Ofgem

We’re pleased to see that government also recognises the difficulties that many consumers with mental health problems currently face engaging in the market. In the recent Consumer Green Paper, government backed Money and Mental Health’s calls for regulators, including Ofgem, to explore minimum standards to make it easier for people with mental health problems to get a fair deal on their essential services.

It’s great to see this commitment at government and regulatory level, but we think this is only part of the solution. We know that many providers are already doing lots to support their customers with mental health problems, and we’re really keen to draw on their experience. This summer we’ll be working with providers from across energy, water, telecoms and financial services, to develop the UK’s first set of accessibility standards for mental health. We want to build understanding of how mental health problems can affect our needs as consumers, and then draw up some practical measures to ensure that people with mental health problems aren’t disadvantaged when trying to access these essential services.