Regulation must keep pace with vulnerable customer need, NAO warns

(by Karma Loveday)

Regulators’ work to support customers in vulnerable circumstances needs to step up to keep pace with the scale of need.

That message came from the National Audit Office (NAO) last week, in a report on the help available to those who need extra support across the water, energy and broadband sectors. 

The NAO noted distinct improvements from the watchdogs since its 2019 report on a similar subject – for instance through encouragement, enforcement and licence conditions. Ofwat and Ofgem have both overseen an expansion of Priority Service Register entries; this service is not available in telecoms.

But it found that regulation is not keeping step with consumer needs given rising costs, and it urged the watchdogs must do more to tackle the drivers of rising debt, increase awareness of the support available, and strengthen that support. This is in light of data including that water and energy debt now stands at over £7bn, and in water, only 39% of customers who struggle to pay are aware of help schemes – meaning millions are missing out on support.

The NAO also found regulators are not aligning their performance measurements with actual consumer experiences and outcomes.

The NAO recommended regulators:

• Improve access to support – to make it easier for people to contact providers through a range of accessible channels that meet the diversity of consumer needs.

• Increase awareness of available help – such as social tariffs, repayment plans and other support schemes, so eligible consumers are clearly signposted and not missing out. 

• Tackle industry drivers of rising debt – including addressing industry practices such as inaccurate billing, delays when people move home and barriers that prevent consumers from switching tariffs. The NAO found that industry practices account for an estimated 35% of customer energy debt.

• Strengthen support for consumers in vulnerable circumstances – promoting services that are designed around need, improving how consumers are identified and supported, and making better use of data and data-sharing across sectors.

Commenting, Mike Keil, chief executive of the Consumer Council for Water, said: "Over the past year CCW has seen complaints from water customers about debt more than double in the face of rising water bills and wider cost-of-living pressures. Water companies have increased support for those struggling to pay but, as the NAO report highlights, help is not keeping pace with the needs of consumers.

“A stronger safety net of financial support is needed to prevent more households falling into water debt. Our independent review of water affordability back in 2021 made clear that a universal single social tariff would ensure financial support flows to where it is needed most. The postcode lottery of financial assistance created by existing water company social tariffs is unfair and unsustainable.”