Debt body warns of danger on inaccurate data in fallout from utilities failures

The Credit Services Association (CSA), the UK trade association for organisations active in the debt collection and purchase industry, has written to OFGEM to seek clarification in respect of the standards customers should expect in regards to the practices of administrators and accounts in arrears.

It has also asked for reassurance that the integrity and completeness of customer data will be an area of particular focus for affected customers since it could have a crucial bearing on the customer journey and how customers are treated at a later date.

In a letter to OFGEM CEO Jonathan Brearley from Chris Leslie, CEO of the CSA, Mr Leslie writes that while it is clear what will happen to those customers with neutral and/or credit balances, the picture appears less clear in relation to those that are in arrears.

The CSA says that those customers may find themselves and their debt transferred to a new supplier, or their debt may remain with the administration and liquidation of the failed supplier. Under the circumstances, it is therefore possible that those customers may face unintended risks.

“Our members comprise specialist tracing agencies and collect on behalf of large banks and utility companies. As such we take a close interest in significant policy matters likely to impact customers and the collection of sums owed to creditors – and so the recent change in the energy supplier landscape has a number of consequences we want to raise with OFGEM directly.

“Certainly, collection services providers who are subsequently engaged will do what they can to minimise the scope for harm to those consumers. Nevertheless, we believe it would be beneficial at this early stage to have greater clarity on the nature of the regulatory framework in which administrators will determine their approach to accounts in arrears.”

Mr Leslie is particularly concerned about the management and transfer of customer data: “The accuracy and completeness of data will be a key consideration, especially for those whose debts remain with those administering the failed supplier,” Mr Leslie continues.

“In those cases, not only will it be crucial that the administrator adheres to the same standards as you would expect from a supplier, but also the new supplier will need to be aware of the existence of the debt, even if it is not responsible for its recovery.

“It will be appreciated that our members will not be able to pre-empt the potential effects of inaccurate data any more than they would be able to advise on wider considerations such as entitlement to benefits including the Warm Homes Discount or what might happen in relation to those customers on pre-payment meters.”

Mr Leslie says that clarity and accuracy of data will, therefore, be critical in achieving effective and appropriate treatment for such customers and in ensuring they are informed and engaged with: “This is particularly the case where an account is subsequently transferred to a third party, such as one of our members. A minor error in data accuracy initially can have profound implications which can contribute to a poor customer journey at a later date.”

Financial difficulty is rarely confined to a single debt or account but can rapidly destabilise a customer’s financial position. Mr Leslie believes that early engagement is critical: “It is important that affected customers are positively encouraged to engage and have the necessary information to enable them to do so in a streamlined fashion,” he adds.

“We are calling upon OFGEM to embark on a proactive communications strategy for those transferred customers who are in difficulty to engage as soon as possible.

“The experience of our members shows that the sooner a person in difficulty engages with that difficulty, the more quickly an appropriate solution can be found – whether that engagement is with a creditor, collector or debt adviser.”