Debt advice agencies demand equal treatment from energy companies
With energy prices rocketing and debts mounting, it is critical that people are able to access debt advice and that energy companies respond to representations made on a debtor’s behalf. But there appears to be a worrying trend for companies to reject financial statements unless these have been prepared by StepChange. This practice has been given a green light by Ofgem, which we think breaches the rights of consumers.
WADA Chair, Amy Taylor, describes a recent case with Scottish Power, but reports that the problem is more widespread. WADA calls for action to be taken by Ofgem to ensure the equal treatment of all debt advice agencies.
Scottish Power Case Study
In February, I saw a client who requested an appointment in person because they struggled to deal with communication over the phone. They had a debt of £1830 to Scottish Power from a previous address. As Scottish Power wasn’t the client’s current supplier, it was a non-priority debt. The client was desperately worried - she had been going without essentials to pay Scottish Power nearly £60 per month.
We completed an income and expenditure statement and discovered that, if my client was paying everything they ought to (despite being in full time employment), there wasn’t enough money left for food to last the month. The financial pressure she was under was impacting her mental health.
I advised her to stop paying Scottish Power and wrote to them explaining that my client could no longer afford to pay £60 per month. I included a breakdown of her income and expenditure.
What followed was months of frustration, culminating in stonewalling from Scottish Power, the Ombudsman and Ofgem, leaving my client with no resolution.
Correspondence with Scottish Power
Scottish Power often responded to correspondence with unintelligible emails that appeared to have been authored by a malfunctioning artificial intelligence. For example, at one point they offered to set up “negative payment arrangements”:
“Dear Amy Taylor, Thank you for your recent e-mail regarding your [sic] energy account XXX. I can see that you are contacting us on the behalf XXXX XXX regarding payment plan. Thank you for the LOA [?] and budget sheet. Since your company's name is not added on the account, we are unable to discuss the payment plan. I have added your company's name on the customer account so that we can discuss the account with you. Having checked the account, I can see that account balance is £1828 in debit I have checked the budget plan and see that payment offer is -£49.71 I have set installment [sic] plan of this amount IP amount -£49.71 Start Date-06 Apr 2022”
They also went off on tangents about things that had never been mentioned and which did not apply to the client’s case
“Dear Amy Taylor, Thank you for your recent email regarding energy account. I can see that you are contacting us about the payment meter.”
Meanwhile, they sent multiple demands by text message and email to my client daily. They ignored my formal complaint about this and sent the debt to a collection agency.
Ombudsman complaint and decision
I assisted the client to take the matter to the Ombudsman, and at the end of July, the complaint was upheld. The Ombudsman decided that Scottish Power should 1) reduce the debt by £100 as ‘compensation’ for poor service and 2) set up an affordable payment arrangement for my client. This is what Scottish Power offered, based on zero disposable income: “12 months @ £137.29 - through to - 60 months @ £27.45” . Their offer ended: “If the proposed extended payment plan is not suitable there is another option available which is for you to contact www.stepchange .org who offer independent and confidential debt advice.”
Problem one: The payment options weren’t affordable because my client had no disposable income.
Problem two: I offer independent and confidential debt advice; it’s literally my job.
I asked Scottish Power if they could explain why they thought StepChange should be involved:
“Unfortunately I can’t, but I do know that they [StepChange] look at each case individually and may be able to offer XXXX some sort of help with the debt outstanding.”
What is the implication here? Is Scottish Power suggesting that other debt advice agencies don’t look at cases individually? I repeated my client’s offer of £5 per month. The response – straying back into the realms of ‘does not compute’ was:
“I have spoken to my manager and we have agreed that if XXXX starts to make payments of £5 per month, but have to advise that we can only add an instalment plan up to 60 month, but if she approaches Step change they may be apply [sic] to agree a plan over a longer period. I will close the complaint, but I have added a 28 day hold on the account to allow time to approach Step change.”
I queried this again and asked why Scottish Power would only accept payment plans from StepChange and not from other accredited debt advisers. I also raised an equalities issue, as my client required a face-to-face service, and StepChange don’t provide this.
The reply:
“The reason we use Step change is that Scottish Power have a contract with them to deal with any debt related queries, as they have a direct contact with our Teams who deal with anything over 60 month, we cannot use any other debt advisers. [Emphasis added]”
I went back to the Ombudsman and advised that Scottish Power had not fulfilled their obligation to set up an affordable payment plan. Surprisingly, the Ombudsman responded with:
“If the proposed extended payment plan is not suitable there is another option available which is for you to contact www.stepchange .org who offer independent and confidential debt advice.”
A wider problem
At this point, I asked around to see if anyone else was having similar problems. and other advisers confirmed this, and, in some cases, provided details of even worse experiences. For example, one colleague reported that Scottish Power would not accept a client’s Mental Health Crisis Breathing Space because Stepchange had not submitted it.
And it appears the problem is not limited to Scottish Power - SSE, OVO, British Gas, and Eon are also guilty of this. Nor is it always Stepchange’s name being invoked (but mostly it is).
Ofgem itself states on their website that ‘Stepchange can help with Breathing Space applications’ but fails to reference Advice UK, Citizens Advice or other local advice organisations who can also help, and many of which provide in-person advice.
Equality Act
Not everyone can cope with telephone advice. For example, people whose first language is not English or those with sensory impairments or learning difficulties. The Equality Act 2010 states that service providers like Scottish Power have to make ‘reasonable adjustments’ to support customers with disabilities. Surely the most obvious reasonable adjustment is to signpost their customer to an advice service which best supports their individual needs. And this is an ‘anticipatory duty’ – Scottish Power must think about the needs of disabled customers and plan to adjust their service accordingly. How can they do this if they have an exclusive ‘contract’ with only one debt advice provider, and that provider does not offer a face-to-face service?
Ofgem
I wrote to Scottish Power, the Energy Ombudsman and to Ofgem to raise my concerns a couple of weeks ago; I pointed out the Standard Licensing Conditions that I am sure are being breached. Yesterday, I received this reply from Ofgem:
“When a supplier only works with one particular debt advice service, due to a contract in place or other such arrangements, customers can still seek their own independent support from elsewhere, for example, Money Advice Service, National Debtline or Citizens Advice. But the customer will still have to work with the debt advice service their supplier has chosen when completing the ability to pay assessment.
So, there we have it: Standard Licence Conditions requiring fair treatment of customers? Forget it. Obligations under Equality Act 2010? Ignored. Other not-for-profit debt advisers like me? Apparently not good enough.
Time to take a stand
We Are Debt Advisers calls on Ofgem to act swiftly to mandate that energy suppliers must follow the same rule imposed on creditors by the Financial Conduct Authority in the Consumer Credit Handbook:
CONC 7.12.2R:
A firm must not ... refuse to deal with a not-for-profit debt advice body, debt counsellor, debt adjuster or with another person acting on behalf of a customer, unless there is an objectively justifiable reason for doing so
We also issue an invitation to the energy companies and to Ofgem to meet with us urgently to discuss this issue.
Notes
4 out of 7 energy providers signpost remote advice services only.
British Gas - https://www.britishgas.co.uk/help-and-support/struggling-to-pay - Stepchange* only
Eon - https://www.eonnext.com/policies/struggling-to-pay - promotes ReachOut*, ‘trading style’ of Sigma Connected. Their aim: to show your creditor you are ‘taking reasonable steps that may improve your ability to pay them.’ Also mentions Citizens Advice and Stepchange*
Scottish Power - https://www.scottishpower.co.uk/affordability - Stepchange* only
Ovo - https://www.ovoenergy.com/help/debt-and-energy-assistance - Citizens Advice, National Debtline*, Stepchange* and Civil Legal Advice (?)
Octopus Energy - https://octopus.energy/blog/what-to-do-cant-afford-payments/#access-support - Stepchange*, Debt Advice Foundation*, National Debtline*, Payplan* (commercial advice-provider)
SSE - https://sse.co.uk/v3/assets/blt09078e271abddd45/bltb980e0296fdb9230/6152ddf48ab9337efb406359/energy_difficulty-paying-your-energy-bill.pdf - National Debtline* and Stepchange*
EDF - https://www.edfenergy.com/for-home/help-support/energy-bill-debt-advice - IncomeMAX**, Citizens Advice Plymouth, National Debtline*
*Telephone/web-based advice only (no in-person advice)
**Mostly telephone advice, service for vulnerable people on request
