Customer Vulnerability and the Utilities Industry 2021

Written on
byHayfa Bukhari

In this blog, we take a look at customer vulnerability in the Utility Industry 2021. We give insight into the current landscape, what the challenges are and where we see things heading in the next few months…


According to Energy UK, around £13 billion is invested every year to deliver power and energy to 28 million households and businesses. Utilities are an essential human need that everyone should have the means to easily access to support their wellbeing.  A variety of recent factors have led to the utilities industry facing unprecedented challenges over the upcoming winter and beyond.  Since the pandemic, Citizens Advice data published in December 2020, states that at least 600,000 additional customers said they were behind on energy bill payments compared to pre-pandemic. As wholesale gas prices rise and lead to higher costs for companies, millions of households in the UK will face a 12% increase in their energy bills from October when a higher price cap comes into place.  In addition, the BBC reported that at the start of 2021, there were 70 energy companies in the UK, but there may be as few as 10 at the end of the year. It is a critical time for energy companies and regulators to ensure the customer is protected and provided with the essentials needed to get through the winter months.


We shall now examine what types of customer vulnerabilities the utilities industry should be recognising  and what can be done to improve the current situation and support the livelihood of all customers.


Vulnerability in the utilities industry

Customer vulnerability is a complex topic. It covers a range of characterics and can be both permanent or transient, as well as vary in severity. Also, the very nature of vulnerability makes it difficult to neatly fit it into certain categories. For any individual, there will be aspects of vulnerability that will impact them in different ways and can also overlap with other circumstances.


This being said, there are broad categories of vulnerability we can consider and look at how it affects a customer’s interaction with the energy sector.


Financial Vulnerability

Personal circumstances and characteristics can have an impact on a customer’s ability to manage their bills. This makes it difficult for them to keep up with essential bills let alone enable them to afford luxuries. To make matters worse, from the 1st of October 2021, energy costs will rise , hitting a record high. This adds to the current state of millions of consumers in the UK who fall under “fuel poverty”. The definition of this varies depending on which country you live in. However, broadly speaking, this refers to people who have difficulty keeping their homes warm. If consumers are unable to afford basic necessities, it will have a detrimental impact on their welfare, so it is critical that energy suppliers address this to ensure all customers are  well taken care of especially in the colder months.  Also, self-disconnection and self-rationing of energy from prepayment meter (PPM) customers continues to be a cause of concern. As we see increasing energy prices and the changes in welfare provisions with the drop of universal credit, this will severely impact those on particularly low incomes.


Health and capacity related vulnerability

This includes people who are affected by loss of hearing, physical disabilities, sight impairment, digital illiteracy, people with poor mental health as well as those with limited understanding of English. These customers may find themselves vulnerable by finding it harder to  access  certain services or engaging with the utilities market. To put it into perspective, there are almost 11 million people in the UK with a limiting long term illness, impairment or disability (Lancashire county council). In addition, the office for national statistics has predicted that there will be an additional 7.5 million people over the age of 65 in the UK in the next 50 years. With an aging population, there is a higher risk of associated health conditions which correlates to a vulnerable customer. Furthermore, Alzheimer’s Research UK has projected that one million people in the UK will have dementia by 2025. We must take this knowledge and put in place policies and regulations that better adapt to the aging population. As well as this, the energy sector must conduct research to learn more about what consumers need from them and how best to cater to them. We need to address how an individual’s vulnerability can have a significant impact on other aspects of their lives which is why more emphasis should be placed on how important it is for the utilities sectors to work with other organisations and provide a standard that is accessible to all.


Location vulnerability

Those who live in isolated rural areas may have limited access to  energy suppliers. This is because not all properties in the UK are connected to the main gas network. Also, the age of rural properties and the lower average wage of urban areas have an increasing influence on the risk of fuel poverty . As the pandemic continues, it has changed the way we live. The work environment is changing and organisations must adapt to this as people are choosing to move away from cities. Companies must provide better facilities across the UK to enable people to work remotely or in locations that facilitate good standards of living.


It is also important to mention, vulnerability can often be intermittent or a passing phase. This is due to the fact that financial vulnerability can result from a sudden change in circumstances such as unemployment or a change in income. Also, temporary vulnerability can occur from a short-term illness or loss of a loved one. This means that, at any time, any customer could be considered vulnerable.

The Personal Finance Research Centre and the University of Bristol  have created a framework that looks at the transient nature of vulnerability. This report helps to identify three categories that are linked to the causes of vulnerability which determines how it indirectly impacted the person affected. Firstly, we must take into account factors such as health. Secondly, there are external circumstances such as life events, financial difficulty or social changes. Lastly, there is the service provided by the supplier which can create, or contribute to an individual’s vulnerable situation.

It is also common that an individual’s vulnerability can be multi-layered. There is growing research in this area and highlights the lack of awareness in this area that needs to be explored further. The Money and Mental Health Policy Institute has identified that people who have mental health problems are more likely to be unemployed, or in low-paid or temporary work, and are three times more likely to be in problem debt.


The industry must work together to end an inadequate and inconsistent service to its users. The inconsistency between different supplies must come to an end to protect an essential-for-life service. Energy suppliers should adopt a strategy that monitors the Code of Conduct to support all customers in vulnerable circumstances. As well as this, the utilities industry should work with other industries such as housing authorities to provide an overall good standard of living. This will make it easier to support those living more remotely.

To learn about how we can help you better recognise, record and respond to your vulnerable customers, visit our customer vulnerability page

Other recent posts

CRO Consumer Duty survey findings: Customers at the heart of your business? Now is the time to prove it.

CRO Consumer Duty survey findings: Customers at the heart of your business? Now is the time to prove it.

We surveyed +80 Senior Compliance and Risk Officers from across the UK’s Financial Services sector to find out their top priorities and investment plans for Consumer Duty and how they’ll meet the tightening data-driven...

Aveni’s end of the year Reunion!

Aveni's end of the year Reunion!

Aveni works at the forefront of innovation in AI and Natural Language Processing, providing quality assurance and regulatory compliance solutions for financial services and utilities companies in the UK. However, that’s not all we...

Adoption of machine learning and data driven technologies at the heart of human centred advice

Adoption of machine learning and data driven technologies at the heart of human centred advice

This is an excerpt from our Human+ whitepaper. Download here for full details about how data driven technologies can power human centred advice.   The recent acceleration in digitisation of financial advice combined with advances...

executive understanding ai

AI: Why an executive understanding is so important’  - 5 key takeaways from Aveni Labs webinar

Data-driven technologies underpinned by rapidly evolving AI, are set to be placed at the heart of firms’ operating models. It emphasises the need for Financial Services Executives to have a clear understanding of AI,...

Record calls consumer duty

The FCA emphasises the importance of recording customer calls to meet Consumer Duty requirements

In the FCA’s recent Consumer Duty Retail Lending webinar, Jonathan Phelan, Head of Department, Consumer Finance at the FCA urged firms to record customer interactions as a critical step in being able to monitor...

financial advice data capturing

Driving Automation in the Financial Advice Industry with Data Capturing

The present day financial advice industry has seen little innovation since the turn of the last decade, but is now entering a period where it will be fundamentally disrupted.    The industry has relied...

Colin Clark Aveni Chairman

Investment heavyweight Colin Clark appointed as chair of AI fintech business Aveni has appointed investment heavyweight Colin Clark as Chairman of its newly formed Board. The strategic appointment comes in the wake of a recent successful funding injection of £2.75 million to grow market share...

financial services space

Aveni's busy week: FinTech Award Win, HomeGame 2 and JP Morgan Innovation Events!

Last week was a busy one for Aveni. From winning a Scottish Financial Technology award to being a part of two exciting and impactful events with JP Morgan and the langcat, we loved getting...

Impact of AI

Human+: Human-in-the-Loop AI

AI is already changing our lives; from expert systems which predict the weather and the stock market, to facial recognition and internet search results. Its application is growing more extensive. Some uses of AI...