Supporting Households in Energy Debt - One Year On

In February 2025, we published Supporting Households in Energy Debt: the role of debt advice, the energy sector and government. This study, commissioned by Impact on Urban Health, analysed the impact of energy debts on individuals and the debt advice sector. Using qualitative and quantitative data from 2023 and 2024, it revealed:

• Energy debt was the fastest growing type of debt seen in debt advice in Great Britain in 2024, both in terms of volume (number of debts) and value (total pounds of debt).

• Debt advisers reported that energy suppliers were the worst, or one of the worst, categories of creditor they deal with.

• The support for people falling behind with bills was inadequate and often excluded those who need it the most.

Ofgem were open and constructive in working with us on our study; it seemed that our findings corroborated what they were seeing and hearing themselves about the experiences of customers in debt.  We welcome the Debt Strategy that Ofgem has rolled out since we launched our report. This seeks to write off some debt from some people’s accounts, and to raise standards of support offered by energy firms. Funding from a levy on energy firms has also led to the launch of a new Consumer Energy Debt Advice service, delivered by Citizens Advice, MAT and StepChange.

One year on from publication, we felt it important to return to informed stakeholders to see if our recommendations and these new initiatives have led to changes ‘on the ground’, specifically if energy firm practices were improving. We did this by hosting a structured session in partnership with the Money Advice Liaison Group, attended by debt advisers, creditors, regulators and other interested parties.

Concerningly, the feedback from the session revealed a near identical picture to the one that emerged a year ago. Issues with poor communication, inefficient processes and convoluted criteria for help and support remain as prevalent as before. This continues to add significant time and stress to case management for debt advisers and undoubtedly is impacting consumers and draining resources in energy firms as well. Advisers also continue to report that energy firms don’t accept their authority to represent their clients, don’t accept the Standard Financial Statement and refuse reasonable repayment offers. There appear to be particular problems arising from outsourced call centres where call handlers are not adequately trained or empowered to support people or to work effectively with their debt advisers. This was just one way in which advisers experienced inconsistency.  Advisers told us (as they had a year ago) that the experience they and their clients receive depends hugely on the individual call-handler. They were surprised and disappointed at how varied the experience can be, from the same firm as well as between different firms.

In the session, we also heard concern from creditors (especially FCA-regulated lenders and debt collectors) at what looked like weaker regulatory standards and lower expectations on energy firms compared to other sectors. They wanted to know if Ofgem has the right tools and powers to drive up standards for vulnerable customers experiencing difficulty.

As we did a year ago, we heard about examples of good practice in the energy sector. Some providers offer strong support schemes and advisers report easy and effective communications with a few specific providers. This strongly suggests that there is no economic or regulatory barrier to energy firms working in a progressive way; the challenge is about spreading this good practice more widely and more consistently.

It is apparent the situation has not improved since the publication of our report in February 2025. This is even more worrying in light of the rising energy prices caused by military action in the Middle East. It shows that the price spike of 2022 wasn't a one-off and increases the urgency for better protections for indebted consumers. Not doing so is a significant risk. We call again for the following:

• Ofgem needs to spearhead a change in how the energy sector supports people in debt. This includes stronger enforcement of rules and changing some existing guidance into rules. We’re supportive of their work on consumer outcomes and guaranteed standards of performance, but remain unsure that without specific provisions focused on people in payment difficulty and debt, these new tools will not bite hard enough to narrow the experience gap between the average customer and the indebted customer.

• A more constructive and effective relationship between the energy sector and debt advice sector should be developed. This needs to start with greater liaison between the sectors.  A key focus is for channels of communication with community-based debt advice providers, to build trust and confidence between sectors. This could make a positive difference to (for example) the pending discussions about “former supply debt” and debt that energy companies are left with when people move house.

• Ofgem should conduct a thematic review of the experiences that people in debt and debt advisers have when they interact with energy suppliers. This is because the experiences of people in debt and debt advisers are materially worse than average. While the issues we looked at haven’t improved, the market-wide metrics for things like call waiting times have.  The “happy path” for customers is getting happier, but other pathways remain troublesome.

• Ofgem should undertake a consumer-centred review of the debt pathway. This is to understand how and where support can better be offered, and to identify key points where safety nets fail and payment difficulties slip into severe indebtedness.

We have written to Ofgem to share these reflections.