Customer Vulnerability - White Paper

A growing issue in the energy industry impacting millions of consumers every year

The issue of vulnerability is no longer impacting energy companies on a small scale; it is our opinion that it impacts over 7 million homes across the UK.


The issue of vulnerability is no longer impacting energy companies on a small scale; it is our opinion that it impacts over 7 million homes across the UK.

This winter, despite the best efforts of the energy industry, millions of customers struggled to afford their energy bill and opted to ration their energy use rather than get into debt. These customers will be largely invisible to your business.This is no longer a minority issue, an outlier or edge case for businesses to create workarounds for.

There is a major issue to resolve.

How do you build a world class function to support vulnerable customers?

This is no longer just an issue for specialist regulatory or additional support teams. The information in this paper will explain why, and suggest ideas to help businesses deal with this ever-growing challenge.

How big is the problem?

The following facts and figures highlight the magnitude of customer vulnerability (sources: The Money Charity, Ofgem):

  • £70.1bn credit card debt held (up to Dec 2017)
  • An estimated 4m households are in fuel poverty
  • Over 4.5m customers are on pre-payment meters
  • 1.6m pre-payment customers self-disconnect at least once a year
  • Almost 1,200 people a day reported that they had been made redundant (Sept to Nov 2017)
  • There are 52 home repossessions every day in the UK
  • The level of debt in the UK that people owe is £1.566 trillion
  • CAB deal with 4563 new debt problems every day
  • Customers in debt can pay approximately £400 more for the same energy simply because they are in debt.

These are startling numbers and concerning indicators that both transient vulnerability and long-term vulnerability are issues impacting more and more of the population. In addition to this, the Competition and Markets Authority (CMA) looked at the percentage of household income being spent on energy. They found that vulnerable people were spending up to 10% of their income, compared with other more affluent customers only spending 2%.

In a recent paper, Ofgem stated:

“Even if suppliers provide energy at the lowest feasible prices, some consumers may find it hard to manage their bills. This can potentially leave customers with high bills, debts, or under-heated homes.”

So, there is acceptance that whilst price caps and safeguard tariffs can reduce the risk, it is by no means a “silver bullet”. In fact, we have seen in recent weeks how the cost of the “capped tariff” has increased.

Highlighting the widely publicised issue surrounding the use of standard variable tariffs, Ofgem added:

“The two-tier energy market means that some groups of vulnerable consumers lose out. Nearly half of consumers who are unemployed, or have intermittent, semi- or low-skilled work, have never switched supplier, compared to under a third of other consumers. This means that they are more likely to be on expensive standard variable tariffs, despite being less able to afford them.” “…….The market is not working well for all consumers, we have committed to help the more disadvantaged in society by exploring how temporary safeguard tariff protection could be extended to more vulnerable consumers. This work sits alongside our extensive work already in train to improve engagement and make competition run more smoothly in the retail energy market.”

Ofgem consider a consumer vulnerable:

“…if their personal circumstances and characteristics combine with aspects of the market to make them:

Significantly less able than a typical consumer to protect or represent their interests; or

Significantly more likely than a typical consumer to suffer detriment (such as higher energy costs or poor service), or that detriment is likely to be more substantial.”

However, there is some room for interpretation with this definition.

Other problems beyond the definition are:

  • Finding space in the collections approach to help vulnerability.
  • The culture itself is so focused on debt collection that lack of trust and the act of ‘jumping through hoops’ is standard practice for customers, adding to operating costs, reducing customer loyalty and the likelihood of payment.
  • How do you spot transient situations from customers playing the system?
  • How do you engage with them? Vulnerable customers are one of the least engaged customer groups.

Part of the problem is that most organisations struggle with varying amounts of all of these issues. It is a complex matter that cannot be solved or addressed easily.

Developing a world-class operation

Some of this information will be recognisable, and some will be fresh and thought provoking. The obvious things are so apparent that they may even be missed in amongst the day-to-day objectives of running a busy multi-channel customer centric business.

We have decided to avoid suggesting tools like “breathing space” and “signposting” and have instead focused on implementing the right foundations and strategies that will support the use of all current and future approaches to support vulnerable customers.

There are three key pillars to focus on when improving or building a world class operation to tackle customer vulnerability:

  1. Create a culture where vulnerability is just another opportunity to help a customer
  2. Evaluate and take expert advice
  3. Assess where you are versus best practice and then develop a plan to improve.

Creating the right culture

Significant and long-lasting change begins with the right culture. Easy to say, but difficult to accomplish. And what exactly does that mean? In particular, what does it mean in the context of building a world class operation for vulnerable customers?

Start with the WHY

Simon Sinek, leading author, recommends looking for the  WHY. You know WHAT you do, you know HOW you do it, now you need to know WHY you do what you do. WHY does your business or team exist? What is your WHY? This is an ideal place to start as it will challenge you on your concepts and will ensure you arrive at a point that will improve things for customers. The output will be rich in detail and will allow you to see the WHY. 

“The more organizations and people who learn to start with WHY, the more people there will be who wake up being fulfilled by the work they do.”

Simon Sinek

author of multiple best selling books including Start With Why (global best seller), Leaders Eat Last (New York Times and Wall Street Journal best seller), Together is Better (New York Times and Wall Street Journal best seller) and Find Your Why.

When evaluating the WHY, include the whole team so that you get agreement, valuable ideas and real buy-in to the output. Ideally invest in taking people away from the day-to-day job. However, if this is too challenging then there are a few smart ways to get team collaboration in a shorter amount of time.

One recommendation would be to use an online team collaboration tool to start conversations and allow everyone to take part and to let the discussion grow organically rather than create too many rules.

Set a task for the team; to work on what they think the current WHY is and what the future WHY should be. Let the team direct where the discussion should go. This will create a community in your business who are all focused on understanding the WHY and creating real ideas to improve it.

Evaluate and take advice

There are three parts on which to focus:

  1. Create a good measure for where you are today
  2. Use all the intelligence available to you, and
  3. Partner with the experts.

Debt charities often say that they believe the industry can do better and does not take on board suggested changes. Is this because the industry is uncaring and focused only on profits? 

This is highly doubtful. A more plausible explanation however is that the industry is complex, and each business has its own unique and shared issues to resolve. It is more likely to be a consequence of a lack of time, multiple priorities and the usual heavy workload.

“I would be more inclined to give them anything they needed if they had kept in touch, whereas I would not for those customers who do not keep in touch or are always paying late”.

Industry Expert

Despite these challenges, now is the time to take a step back and plan for a proactive approach to helping vulnerable customers.

Measure to improve

What measures can you use to help understand the scale of vulnerability in your business?

Consider the types of measures that would give a view of vulnerability. Look for lead indicators, as well as lag indicators. For instance, if customers are running their pre-payment meter on a constant low credit, then this is likely to be a customer in distress.

As an example, here is a quick start set of metrics:

  • Percentage of pre-payment customers on low credit
  • Percentage of pre-payment customers who self-disconnect
  • Number of customers over the age of 70
  • Number of customers using Fuel Direct to pay for their energy
  • Number of customers on Warm Home Discount
  • Number of customers on pre-payment (when fitted for debt recovery)
  • Number of customers registered on the PSR

These measures provide a large population from which to be more surgical with your next steps.

Analyse the data and look for customers that cross multiple data populations. Using a data led approach, a propensity to be vulnerable model can easily be built which will enable more proactive identification of your vulnerable customers.

Use available intelligence

To help vulnerable customers, listen to all your sources:

  • External data - DOB data is an easy one to start with
  • Internal data - Using the measures mentioned above
  • Customer signs - Avoid script-based calls where advisors just hear, as opposed to actually listen.

Make the most of this intelligence by combining data with a team of fully engaged and listening advisors. This will result in improved customer experience for all customers, not just those who are currently vulnerable.

Partner with experts

The following organisations are well established experts and resources/partners in the market when it comes to understanding customer vulnerability. Any leader who is responsible for credit, collections, service or complaints should make time to engage with these groups to create a shared learning opportunity.

Money Advice Trust/National Debt Line
The Money Advice Trust helps people across the UK tackle their debts and manage their money effectively.It provides free, independent advice via the National Debt Line and also supports businesses who may come into contact with people who are in debt, by providing training and resources.

StepChange help people with debt problems take back control of their finances and their lives. They provide free debt advice, to help individuals deal with debt and set up a solution

Sustainability First
The recent report release on Project Inspire: Energy for All - Innovate for All is a first-class resource to outline the size of the issue and has some practical examples of some good and best practice.

They above organisations are very active across the industry and would be happy to work with leaders who want to make positive, and lasting, change for customers.

Build a roadmap

One off initiatives have limited impact and can lurch from one thing to another depending on the leadership, budget and other business priorities.To truly make an impact, invest in a plan that helps the business remain focused on a goal and strategy that everyone understands and supports.

A roadmap is a valuable way to do this. Completion of the previous two pillars mentioned above, will pave the way for building the roadmap.

“Creating a collaborative space where the customer understands the value exchange in providing more information for a more tailored approach to their individual circumstances is key. The more you know/understand about each other the more you can work together to create fair and sustainable outcomes (and better long-term customer relationships)”.

Industry Expert


The size and extent of customer vulnerability in the UK is both alarming and staggering. Managing customer vulnerability is the new differentiator for any business whose WHY is making customers’ lives easier. Knowing how to leverage this can be the difference between building long-term customer loyalty and reducing bad debt, and destroying customer value.

As an issue, customer vulnerability is here to stay, and the most enlightened businesses will prosper.

Suggestions for improvements

“Positioning, communication and creating a low friction UX are all pivotal on the line between good and bad customer engagement, even down to profiling the right messaging, tone of voice and content.We've built a collaborative digital self-service environment to address these issues using some very cool tech!”

Industry Expert

  • Establish a round-table discussion with another water or energy provider to discuss ways and opportunities to help vulnerable customers. 
  • Improve your fact base. For example, do you know how many vulnerable customers you have? How many of your customers self-disconnect more than twice a month?
  • Engage with a debt charity and establish what you could do together in partnership.
  • Revisit your training and scripting processes and question if it is compassionate enough or does it force customers to provide proof at every stage?
  • Bring your customers in to the business by creating a specific panel or focus group of customers who have been in debt to hear from them directly how your business has helped or hindered them.
  • Review your pre-payment self-disconnection support processes. Are you doing enough to track customer balances?
  • Explore opportunities to collaborate with 3rd parties to drive up engagement with vulnerable customers, especially where there is a breakdown in the relationship with your customer.

About the author

Gary Gilburd has been working within the credit and collections industry for over 25 years. Previously holding senior leadership and director positions in some of the UK’s largest debt collection and debt purchase businesses before co-founding The Sigma Financial Group with Mike Harfield.

Sigma was founded as a debt purchase business in 2011 but over the past seven years has become one of the UK’s prominent outsource servicers within the UK energy sector, with a specialism in credit management and customer service.

If you want to talk further regarding the information contained within this White Paper, please contact either of the following experts from Sigma:

Gary Gilburd, Chief Executive Officer –

Mike Harfield, Chief Operating Officer –

Look out for next month’s insight paper from Sigma on predicting customer contact and complaints. 
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