On 15th April 2015 ESAN, Citizens Advice and Money Advice Trust joined forces to host a conference on practical steps towards effective implementation of vulnerability strategies. Over 70 delegates from firms, regulators and voluntary organisations across financial services, energy, water and communications attended.
The theme of the day was practical and designed to be helpful to firms rather than concentrating too much on theory and definitions. Many common themes that relate to all sectors emerged – around the multi-dimensional nature of vulnerability, how a risk-factor approach rather than categorisation can help, the importance of staff correctly picking up on triggers at the first point of contact, staff training, and maintaining excellent links with advice and voluntary sector groups were all key issues. Three firms presented case studies on their experiences of developing ways of treating customers in vulnerable circumstances better. FCA, Ofcom, Ofwat and Ofgem all outlined their developing plans in this area.
A background paper on the relevant issues can be found here:
Consultation closes 22nd September 2014. Read more here.
Gas and electricity are essential services. Providing extra services to people who need them to access the market and stay safe remain critically important. This consultation seeks views on proposals that require suppliers, electricity distribution network operators and gas distribution networks to:
•provide additional non-financial services to energy consumers who are more likely than a typical consumer to experience problems with communication, safety and supply;
•take reasonable steps to identify people who would benefit from these services;
•share consumer information with each other and other utility companies, using vulnerability indicators agreed between them;
•raise awareness of services, including developing a single cross-industry brand; and
•conduct annual independent audits of their performance and publish findings yearly
The Consumer Council for Water has published results of their 2013/14 Water Matters tracking research into customers’ views on their water services.
Each year we ask customers for their views about the services they receive from their local water companies, and the value for money of those services. This year overall, more than 87% of customers say they are satisfied with the services but less than three quarters ( 69%-71%) consider the services are value for money.
Ofgem has analysed differences in price between different payment methods used by consumers following an information request to suppliers in February 2014. It has found that the gap between prepayment and direct debit has narrowed since 2009. Read more here.
Ofgem rules allow suppliers to charge different prices for different payment methods, but only if the amount reflects the cost of providing those accounts. Some larger suppliers do spread some of the costs of prepayment customers among the whole of their customer base. This is consistent with regulations and guidance, which allow for differences. These result in reduced price differences for vulnerable customers, who often do not have the option of alternative payment methods. Suppliers can also charge the same price regardless of payment method, so they can spread the costs they incur across all customers. However, the majority of consumers pay by direct debit (including half of all fuel-poor households) so any change would mean these consumers would pay more.
Customers who use prepayment meters are now charged around £80 a year more on average compared with direct debit customers for dual fuel. This is a significant fall as the difference was almost £140 in 2009. Ofgem is satisfied that across the market the price on different payment methods reflects the varying costs suppliers face in providing them. The price difference for quarterly payment compared to direct debit has remained at around £80 since 2009.
Shelter warns that almost 4 million families are living without any safety net.
Some 3.8 million families have only enough money to pay their rent or mortgage for a month if they lose their jobs, the housing charity has said.
Shelter, which surveyed 7,500 people, said high housing costs and stagnating wages meant many were living on a financial knife-edge.
Shelter’s findings were based on a YouGov survey of 7,500 adults who pay rent or a mortgage. It says 44% of working families with children under the age of 18 could be one paycheque away from losing their homes if they became unemployed because they have little or no savings.
Its researchers also found that 29% of families would immediately be unable to afford to pay for their home if they lost their income.
The FCA is concerned that customers are being charged high rates to contact financial services firms and will consult with industry, consumer organisations and consumers to ensure customer calls are more affordable.
According to FCA boss Martin Wheatley:
“We want to update our rules so that they best meet your needs as a customer. This means charges for both consumer helplines and complaint lines being capped at the cost of a basic rate call – so the same price as calling your neighbour or a family member on their landline”.
FCA will issue a consultation but wants firms to look at their practices in advance of this.
The FCA’s consultation will propose the standardisation of the rules so that charges for consumer help, and complaint, lines are capped at the cost of a basic rate call. In a letter to consumer group, Which?, the FCA said it believed that the introduction of requirements in the Consumer Rights Directive, designed to ensure firms no longer charge a premium for calls, should apply to all financial services firms. The Directive requires firms to offer basic rate numbers for enquiries but at present, this does not apply to financial services firms.
In the same consultation the FCA will also look at a number of proposals to improve complaints handling by financial services firms including looking at complaints reporting and responding to the recommendations of the Parliamentary Commission on Banking Standards. The consultation will be published later this year.
This paper by Citizens Advice summarises the changes to benefits that have already taken effect and those still to come, and looks at what companies can do to identity customers in difficulty. It outlines steps companies can take to understand their customers, to proactively work with them, forbear from taking action that may make matters worse, and refer on those who need help.
It is also important that creditors are proactive in looking out for signs of potential financial difficulty and offering support accordingly. Forbearance and breathing space from their creditors will help customers who are having to adapt to a reduced income or a change in the way that their benefits are paid to avoid reaching breaking point.