Posted: 6th December 2018

The past few years have seen the FCA, Ofgem, Ofwat, and a raft of other trade and regulatory bodies, turn a particular eye towards customer vulnerability.

It is a reality that there are families and individuals in the UK without access to some of the crucial services that many of us take for granted. Furthermore, financial literacy levels are not uniform across the country, leaving some unable to enter the value-chain of financial services, utilities or telecoms, and unable to reap the benefits that technological innovation and changes in rules may bring.

Much has been done over 2018 to address the issue of vulnerability – from the implementation of price caps, discussions around a specific ‘duty of care’ and even a super-complaint on the so-called ‘loyalty penalty’ – but more can still be done.

Last year, we spoke to some of the most influential voices from within industry and regulation and asked them what they expected to change and develop in 2018. This year, we have gathered these voices together again to review how well goals were met, and to take a forward-looking view of vulnerability regulation going into 2019. What has happened this year to improve the lot of vulnerable customers? What can still be done? And where will we be at the end of 2019?


Are we moving quickly enough to support customers in vulnerable circumstances?

In last year’s article we noted that regulators from financial services and utilities were stepping up their focus on firms’ dealings with vulnerable customers. Regulators continue to list ‘customer vulnerability’ as a top priority, and the issue of deprivation and disadvantage has come to feature prominently in news media.

“We haven’t seen anything like as much progress in data sharing as I’d been hoping for. Government departments are sitting on vast amounts of data which could help us identify customers at risk, and they now have the legal power to use that data in new and productive ways. But we have yet to see any benefits from the Digital Economy Act. Let’s hope 2019 finally brings the breakthrough we’ve been hoping for.”

Steve Crabb, Director of Corporate Citizenship and Customer Vulnerability, Centrica 

“In the energy sector, the level of collective industry focus on the issue of vulnerability has further increased during the course of 2018. An independent Commission for Customers in Vulnerable Circumstances was set up in March 2018, with the purpose of improving the current understanding of vulnerability within energy, and to enable improved support for customers through a series of recommendations for the industry, regulator and Government.”

“The Commission’s work has been informed by a wide-ranging response to its Call for Evidence, and a series of hearings with experts and consumer groups across the breadth of the UK. The Commission’s report, to be published at the start of 2019, will set out a series of recommendations for energy suppliers and further emphasise the importance of ensuring that all energy providers support vulnerable customers as a key priority for their business.”

Colin Brooks, Head of Operational Policy, Energy UK


An evolving understanding of vulnerability

Vulnerable customers are not a single, uniform group, as we have previously outlined in our White Paper on the topic. There are countless factors that can cause a family or individual to enter the ‘vulnerable’ category, and these continue to evolve alongside market forces, environmental events and sociological effects.

This past year has seen a general increase in understanding about vulnerability. Media reports have well and truly turned the public eye to disadvantage in many parts of the country and in many spheres of life. Regulators and firms will need to take this updated understanding and adapt their vulnerable customer policies appropriately. 

“As our understanding of consumer vulnerability grows, we’re getting to learn more about the subtle nuances and variations on a theme, and this will be something that’ll take us well into 2019 and beyond. But what’s striking for me is that we shouldn’t forget that all of this comes down to two things: Customer service and treating people as people. That’s how it becomes your everyday.

One aspect of where there’s still a lot of work to be done is where businesses inadvertently push consumers into vulnerable situations because they haven’t met their accessibility needs. Businesses talk a lot these days about ‘the customer experience’ and yet this is an area where, time and time again, I see customers fall foul of a rigid process or inaccessible service.”

Caroline Wells, Director of Different Petal and MeIncluded

“On the positive side, there has definitely been progress on the mental health front, building on last year’s excellent guidance from Chris Fitch, the Money Advice Trust and Energy UK. In the summer, the Money and Mental Health Policy Institute published a ground-breaking report on the challenges customers with mental health problems face accessing essential services like energy, water and finance …

Back in February, [Centrica] helped give birth to guidance on best practice in being ‘dementia friendly’ for utilities firms. That was definitely a highlight of 2018 [for Centrica] – the key now will be ensuring that it is visible to, and adopted by, as many businesses as possible.”

Steve Crabb, Director of Corporate Citizenship and Customer Vulnerability, Centrica


Enhanced protections in the utilities and insurance sector are taking effect

With a greater understanding of vulnerability and new data, regulators have begun to use their powers to protect customers, intervening in terms of price and practice. For example, Ofgem has recently secured an energy price cap on default tariffs that will “give 11 million a fairer deal from the 1st January”. A utilities ‘safety net’ also exists for vulnerable customers, though this pledge to not knowingly disconnect vulnerable customers must be individually made by each supplier and will be folded into the general price cap in the future. Various other protections, including for those in debt, also exist.

Protections for vulnerable customers become increasingly important in the winter period, as homes begin to get colder, pipes freeze, rivers flood and claims on insurance policies rise.

“Supporting consumers in vulnerable situations continues to be a key priority for Ofgem. We have introduced a number of protections in the last year, including the vulnerable consumer safeguard tariff and a cap on the warrant charges when suppliers forcibly install a prepayment meter. We continue to share best practice and highlight and tackle poor practices, including through our annual vulnerability report. One very positive development is that disconnections are now very rare.”

This is hardly an exaggeration. Last year, only 17 households had their energy supply disconnected, down from 8,300 only a decade ago.

Dennis Berg, Senior Manager, Vulnerability and Consumer Policy, Ofgem

“There are many insurance products covering different risks that we face. The one thing they all have in common is their contribution to making us more resilient to external shocks. Yet, helping us be more resilient often involves insurers interacting with us when we are at our most vulnerable (e.g. claiming on a life insurance policy when a loved one has passed away or on a travel policy when we are ill stranded abroad).

We hope that the forthcoming FCA guidance on vulnerability, expected in Q1 2019, will contribute to this by focussing on the practical ways in which vulnerability can be addressed. It would be particularly helpful to see practical guidance on how to best address acute transient or fluctuating vulnerability.”

Raluca Boroianu-Omura, Assistant Director, Head of Conduct Regulation, ABI

“Policy interventions in the energy sector are increasingly locking vulnerable customers in to the handful of large firms who offer Warm Home Discount, the vulnerable customer safeguard tariff and other forms of support; if you are a vulnerable customer receiving these benefits from one of the Big 6, what incentive do you have to switch to one of the newer entrants who don’t participate in these schemes? I really hope that regulators and policy-makers work to make the playing field a bit more level in the coming year.”

Steve Crabb, Director of Corporate Citizenship and Customer Vulnerability, Centrica


Making sure markets work for everyone

Overall, vulnerability does not seem to be a focus within regulated industries that will dissipate any time soon. We have certainly seen firms responding with updated policies and procedures this year – though not always to the desired effect. Principle challenges remain identifying just who should be classed as ‘vulnerable’ and how to treat all of them equitably, paying specific heed to their needs. A ‘one size fits all’ approach is likely to be helpful for many, but damaging for others, especially those who are unable to access advice or digital channels because of disability or mental illness.

The problems of today’s vulnerable customer regulation will not be entirely resolved in 2019 – there will always be emerging issues and unpredictable forces at play – but it is encouraging to see so many industry bodies dedicating so much time and resource to solving the most pressing issues that we are currently facing.

Our Fair Treatment of Customers in Vulnerable Circumstances white-paper is a must read for any firm looking to improve the way it deals with vulnerable customers. Huntswood have supported numerous firms across regulated markets to ensure the fair treatment of customers in vulnerable circumstances, both in house and as part of outsourced engagements.

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