Benchmark natural gas prices in the UK and Europe have tripled this year leading to higher energy costs for companies and therefore, more expensive bills for consumers. We take a look at how this can make customers vulnerable in a specific way, known as transient vulnerability, and how companies should be aware of how to recognise, record and respond to these situations.
Around 15 million households across the UK were already facing a 12% rise in energy bills from the start of October 2021 when the price cap was increased. The twice yearly review on the price cap is set to bring more frustration for consumers as households have been warned of a further “significant rise” next year to compensate for the uplift in wholesale prices and an uncertain winter ahead.
Customers who were hoping to beat this by finding cheaper fixed rate contracts, now have few options as most of these deals have been withdrawn due to the soaring prices. Compare the Market went one further and switched off their energy comparison tool due to the lack of deals available, leaving even some savvy consumers in a vulnerable position for the first time.
Fuel poverty is leaving many customers vulnerable for the first time
Given that this energy crisis is coinciding with a time when the pandemic-driven £20 Universal Credit uplift and furlough scheme are ending, consumers previously unaffected are now being pushed into fuel poverty. A household is said to be fuel poor if after housing costs have been deducted, more than 10% of their net income is required to pay for their reasonable fuel needs.
This income shock is an example of a transient vulnerability where a consumer’s circumstances are constantly changing. They may not be able to make a complex or unexpected decision because of the specific circumstances they find themselves in. Customers who currently find themselves vulnerable due to the spike in energy prices may find themselves less so in spring when they use less gas and electricity to heat their homes. Another example would be if someone is going through a divorce or a loss of a loved one and who therefore may be vulnerable in the short term but not over a longer period.
Transient vulnerability can be difficult to recognise and record
Companies are becoming more proficient in recognising vulnerabilities in customers, but transient vulnerability can be more difficult to recognise and record. A report by Just of 18 diverse life and pensions firms stated that all reported a difficulty in understanding what to do with people with transient vulnerabilities under GDPR. How often would a customer need to be contacted to determine if the vulnerability was still applicable? And how will a customer feel knowing that information is on file?
In large firms, for example energy companies, there are likely teams of advisers who don’t necessarily have ongoing relationships with individual customers. Unless there is a clear record of vulnerabilities including those of a transient nature, there is a risk to the customer around consistent customer experience and the on-going handling of a vulnerable case.
How can companies help customers with transient vulnerabilities right now?
The Priority Service Register is a free support service for vulnerable people which offers services such as large print or Braille bills, free gas safety checks or help with meter readings. This is a valuable platform to protect a companies most at risk customers however the process of identifying who should be on this register is crucially important – there are currently millions of applicable customers unaware of such a scheme and how it could help and conversely groups of people who perhaps no longer need additional support but haven’t been removed, wasting energy companies money. So how can firms recognise, record and respond to their vulnerable customers in an ongoing manner?
The Consumer Vulnerability Strategy published by Ofgem acknowledges these challenges but doesn’t provide any advice on how to actually handle them. There are calls for more detailed guidance from the regulator on treatment of these customers while maintaining Data Protection compliance. In the short term firms should be more aware of a rise in transient vulnerabilities and implement a strategy for tackling risks of harm associated. For example, implement dedicated staff training to provide better insight and understanding to make identification easier, introduce automation through technology to ensure vulnerabilities are recorded and reviewed; and ensure a better flow of information between Customer Services, Quality Assurance, Product Development etc to allow the entire business to optimise how to protect vulnerable customers.
Energy prices will stabilise when supply issues can be resolved and the energy crisis is brought to an end which will reduce the financial strain on those affected; however, millions of households are affected by dozens of other drivers forcing them into periods of transient vulnerability which must be recognised and treated fairly.
To learn about how we can help you better recognise, record and respond to all customer vulnerabilities, visit our customer vulnerability page