Fair shares

Sharing credit data can help utilities treat customers with payment problems fairly and sympathetically, says Martyn Cladingbowl.

Utility bills have long been low on customers’ payment priority lists compared with mortgage payments, credit card payments and even mobile phone bills. In light of rising utility prices and squeezed household budgets, unpaid utility debts are mounting up faster than ever before. While utilities obviously want to recoup what is owed to them, this increased financial strain on households is placing a new demand on the industry: a need to show willingness to proactively understand hardship, vulnerability and poverty. In this context, sharing credit data is an invaluable source of insight.

Getting the full picture of a customer’s credit commitments and subsequent payment performance can help providers demonstrate and deliver on their obligation to act fairly and responsibly in the supply of their services. The aim should be to provide real help to customers that need it the most.

Experian shares data from more credit providers than any other company and was part of a coalition that agreed the rules and processes for the sharing of credit data. This means our utility clients are able to consistently access a great amount of relevant information to provide a more complete view of an individual’s level of indebtedness.

So as a utility, if you want to start data sharing, what do you need to do? The UK has a fully reciprocal system, so to access data, you must share data. There are two options available.

The default option is to share data only on accounts in the very worst state of difficulty. The opportunity to know if one of your customers has defaulted with any other provider can help you better understand their needs and determine the most appropriate payment strategies for them. However, it is important to realise that a lot happens before customers get to this point. A build up of debt and several months of missed payments is likely to have taken place first, all of which is available to those that share, and consequently see, full data.

Hence the full data option covers all records from the moment an account is opened. It will show the opening and closing of accounts, the agreement of forbearance schemes, debt management programmes, the movement of balances and any rises in indebtedness. Having access to this data will help identify and prioritise those that might be vulnerable and about to default on a payment, giving you time to manage that customer in a different way and potentially put them on a different account plan or structure.

Studies have shown that making data additional to that from internal billing systems available for analysis, modelling and segmentation can reduce live debt by 20 per cent and final debt by 15 per cent. However, the benefits of sharing credit data do not just apply when a customer account falls into arrears. To achieve true value, utilities should use this insight to manage customers across their entire life cycle, tailoring services to each individual’s circumstances and needs. This will improve the customer experience and lower cost to serve.

There are benefits for customers as well as companies, so demonstrating responsibility by being fair and open in your communications from the outset is essential. The law requires that consumers are notified of data sharing intentions at the start of a contract. An additional benefit is that evidence shows that from the time customers are advised data will be shared, they take steps to make sure they pay if they are able to.

With an increasing appetite among utilities to apply these practices, you do not want to be a late adopter. The benefits of implementation can in some cases equate to savings running into millions of pounds. Equally as important, data sharing shows your organisation is committed to administering credit assessment with responsibility, dedication and compliance.

Martyn Cladingbowl, director of utilities for Experian

This article first appeared in Utility Week’s print edition of 6 July 2012.

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