Paying Fair Guidelines to support customers in debt

Paying Fair Guidelines to support customers in debt

This page sets out our principles and minimum expectations for the services that water companies deliver to support residential customers in debt. This is part of our Paying Fair Guidelines. 

4. Be proactive in contacting customers in debt

Companies should be proactive in making contact with customers to identify whether they are in payment difficulty. Companies should regularly review their contact methods to make sure they meet the needs of customers. Companies should use every contact as an opportunity to listen, gain more information about the customer’s ability to pay and share ways they can be supported. 

4.1 Treat customers fairly and in a way that is empathetic to their current situation. Companies could also use this as a further opportunity to:  

  • check customers’ consumption, billing and account details to make sure they are correct;  
  • check a customer’s preferred contact method and time of day; and 
  • make sure customers who are eligible for help receive it, and quickly. 

Proactively offer other alternative payment options to customers in debt  

4.2 Highlight the available payment options in contacting customers in debt or further correspondence sent to them. The options can be either: 

  • in the text of letters; or  
  • enclosed in a separate leaflet or the company’s code of practice on debt recovery.  

4.3 Proactively offer customers who are in debt and in receipt of eligible benefits the option to pay using the ‘Third Party Deduction Scheme’ (known as ‘Water Direct’ in the water sector) when all other avenues of recovery have been exhausted. Companies should explain how the scheme works and make it clear to customers that other options are available.  

4.4 Where companies themselves wish to apply for the ‘Third Party Deduction Scheme’ on behalf of a customer they must make reasonable efforts to inform the customer of their actions before doing so.  

4.5 Work with local JobCentre Plus and Pension Service offices to build effective working relationships and contact with customers that may need support.  

4.6 Once a customer has been placed onto Water Direct, freeze other debt collection activities. 

4.7 Companies should engage directly with customers on the ‘Third Party Deduction Scheme’ – or about to be placed on it – to help explain the scheme (such as what will impact the length of time the plan is in place) and encourage customers to share information about their circumstances   to avoid them getting further into debt. 

Send clear reminders that provide advice and next steps 

4.8 In a water company’s first written or verbal communication with a customer, the company should prominently state that free debt advice  services are available to customers and provide the customer with contact details for  MoneyHelper or  other free debt advice organisations. Where possible, companies should work with authorised debt advice organisations so that, if the customer agrees, they can be passed directly to those organisations (a ‘warm referral’) to receive debt advice and other help.  

4.9 At least three prompts (including the bill) – using at least two communications channels – for the customer to contact the company before progressing to debt recovery action. Companies should first use a customer’s preferred method of communication and (if relevant) time of contact – before trying other means if a customer fails to respond .  

4.10 Customers should be given reasonable time to pay their bill before a reminder is issued (this is especially important if using second-class post). Good practice would be to allow a minimum of 14 days following the date the bill was due for payment before issuing a reminder. 

4.11 Each reminder should set out what will happen and when action will be taken if the customer fails to respond. The various actions the customer can take should be set out along with a clearly signed contact number and website address. To encourage contact, companies should consider offering online chat and freephone debt helplines in addition to their standard geographic telephone numbers. 

Contact customers using different methods and stop chasing them if they are getting debt advice 

4.12 A variety of communication methods and times should be considered to establish contact (such as web chat, texts, telephone calls, letters and visits) if a customer fails to respond using their preferred contact method or preferred time of contact.   

4.13 The timing of attempted repeat contacts should be varied where possible (where the customer fails to respond during their preferred contact time or has not stated a preference).  

4.14 Communication methods and timing should take account of any special requirements for those customers who are registered for priority services and should comply with the provisions of the Equality Act 2010. 

4.15 The timing, frequency and manner of contacts should not be oppressive, misleading or threatening, and should conform to accepted good practice, including that set out in the Financial Conduct Authority handbook 

4.16 Make sure that sufficient resources are available to handle any contacts received, particularly at times of bulk debt related mailings. Companies should also document all contact attempts made, regardless of whether or not the contact was successful. 

4.17 Cease chasing contact with the customer where the company is aware the customer is actively engaging with a known debt advice provider. Companies should also encourage customers to agree to a referral to debt advice by highlighting the benefits to customers of, for example, being able to access Breathing Space, income maximisation checks and other wider support. 

Make sure communications are friendly and company representatives are easy for customers to talk to  

4.18 Any new approaches or systems should not reduce opportunities for customers to approach the company and should be inclusive by design (see expectation 1.29).  

4.19 Communications should be friendly and company representatives should be easy for customers to talk to, to encourage customers to communicate effectively with their supplier or collection agency. 

Tailor debt recovery strategies and review them for suitability, fairness and empathy 

4.20 Review debt recovery strategies on a regular basis. Where these reviews result in changes to a company’s debt recovery strategy, the company must consult with CCW on changes to their code of practice on debt recovery. Billing systems, digital channels and incoming calls should be used, wherever possible, as an opportunity to identify customers in difficulty. This would include, for example, recording customer details that might indicate that the customer is vulnerable to falling into debt or flagging up where regular payers suddenly default. 

4.21 Debt recovery strategies should include a consistent approach that clearly shows the actions the company will take as the level of a customer’s debt increases. 

4.22 Where information on individual customers’ circumstances is unknown, segmentation of customers should be used wherever practicable, to tailor debt recovery to individual customers or particular debtor groups.  

Demonstrate quality service  

4.23 Keep records showing how many times you have tried to telephone, visit or contact individual customers (whether attempts were successful or not), and the dates of reminders and notices, along with any actions occurring as a result. Customers and CCW may wish to be assured that the water company has made a reasonable number of attempts to contact customers whilst at the same time adhering to the provisions of the FCA Handbook or equivalent publication.  

4.24 Highlight customer outcomes and testimonies on resolving debt problems to encourage other customers to contact you. 

5. Be clear, courteous and non-threatening to customers in debt

All communications sent to customers in debt should be in plain language and numbers, be courteous and non-threatening. But the water company should clearly set out the action which they will take if the customer fails to make payment or contact the company, along with the possible consequences for the customer 

Design the content of communications around customers’ information needs 

5.1 All communications – such as texts, emails, letters and reminders – to customers who have fallen behind with payment should be clear about when payment is due and  what will happen if the customer does not pay. Where possible, the correspondence should be tailored.  

5.2. The code of practice on debt recovery must be enclosed with reminders or details given on how a copy can be obtained.  

5.3 Any correspondence should encourage the customer to contact the company and set out how to get free independent debt advice.  

5.4 Where communications are written, information on financial support available should be prominent and placed near to the amount owed on the bill. Where communications are posted, information on financial support should be on the envelope (see expectation 1.20). 

5.5 Where one is available, the customer should be advised of a company’s financial hardship fund or other affordability scheme.  

5.6 The customer should be given a clear indication of the length of time they have in which to act and a variety of ways to contact the company  to use in the event of requiring further information. 

5.7 If notices or letters themselves do not list the customer’s options for payment arrangements, they should be accompanied by communications which do, or should clearly detail where the customer can obtain this information. 

Tailor the language of communications to customer’s needs 

5.8 All communications – such text, emails, letters and literature – should be: 

  • in plain language; 
  • in plain numbers;  
  • designed to be inclusive by design (see expectation 1.29);  
  • seek to encourage customers to speak with the company through the design and use of clear and non-threatening language that minimises any psychological distress; and  
  • (where possible) be tailored in tone and style according to the individual debtor. 

5.8 Make sure that the appropriate format is used for customers that: 

  • require priority services 
  • do not use English as their first language; or  
  • have communication difficulties. 

Use fair tools for encouraging payment 

5.9 Do not threaten to disconnect (whether directly or by implication) for non-payment any property in which someone has their only or principal home. Particular care is needed when dealing with mixed-use premises so that customers’ rights are respected. 

5.10 Void property notices should not be used as a debt collection tool by companies or by debt collection agencies. 

Explain the implications for customers at risk of enforcement action 

5.11. If the customer is at risk of enforcement action after a judgment has been obtained in the county court, the company should explain the implications of such action simply, fully and jargon free but without being misleading. Many companies take enforcement action in relation to judgments obtained by applying third party debt orders, charges on property, order to obtain information, warrants of execution or attachment of earnings. In these cases, the company should explain the terms and processes and advise the customer that processes are subject to a court judgment first being made. The consequences of such action should also be clearly set out along with a contact telephone number for where further information can be obtained. 

Use enforcement action as a last resort 

5.12 Use enforcement action as a last resort, once all other options for repayment have been exhausted. Companies can use enforcement action earlier in the debt management process where they can show evidence that: 

  • a customer routinely does not pay their bills; and/or  
  • they have evidence that they have taken all reasonable steps to establish the customer doesn’t have an underlying financial issue or other vulnerability that requires support before a customer can pay. 

5.13 Any enforcement action taken or charges added should be proportionate and reasonable in relation to the circumstances of the customer and the size of the debt. Where possible companies should avoid using high court enforcement, except in those cases where they can show customers are persistently and deliberately not paying.  

5.14 Exclude customers known to be in vulnerable circumstances from any form of enforcement action where the customer: 

  • is eligible for help but have not yet received it; 
  • is in the process of receiving help from the company or other bodies that the company has partnered with;  
  • has applied or been accepted for the debt respite (breathing space) scheme;  
  • is on a repayment plan already agreed by the company; or   
  • where the cost of the enforcement is likely to exceed the possible revenue the company or its agents can recover.  

5.15 Put collection activity on hold immediately if companies or their agents become aware a customer is in vulnerable circumstances and should be receiving support from the company– and seek to support them in in line with our expectations under Principle 2 ‘Make sure customers who are eligible for help receive it when it is needed’. 

Respond quickly, fully and appropriately to disputes or queries about debts 

5.16 Where debts are queried or disputed, the company should respond promptly, fully and appropriately to the customer’s enquiries.  

5.17 Collection activity should be put on hold whilst investigating a reasonably queried or disputed debt. 

Regularly review and update debt communications learning from feedback and complaints from customers 

5.17 Regularly review and update debt communications using data, insights, feedback and lessons from complaints from customers. 

5.18 Give CCW an opportunity to comment on the design and text of any substantive changes to debt recovery communications, and be prepared to outline all changes during CCW debt audits. 

5.19 Make sure that the code of practice on debt recovery is kept up to date, reflects operating practices and is available online or in hard copy – and reviewed at least once every three years. Companies should use customer insights and intelligence (see expectation 1.26-1.28) in making changes and make sure they are inclusive by design (see expectation 1.29). CCW must be consulted too. 

6. Agree payments that are right for each customer in debt

When agreeing payment arrangements with customers, the customer’s circumstances should be taken into account wherever possible. Payments should be based on a consistent approach for assessing a customer’s ability to pay. Repayments should be understandable to the customer – and regularly reviewed as their circumstances change to make sure repayments are sustainable. And the customer should be re-engaged if the payments fail. 

Double check the customer is in debt 

6.1 Offer customers a way to check they are in debt. Before taking enforcement action, the company should carry out further checks to make sure the customer is in debt and that any figure they owe should not be adjusted or whether (for example) they: 

  • should have received help from the company earlier; 
  • have a leak; or 
  • there is an error in their account information. 

6.2 Investigate and resolve any issues promptly and thoroughly where the customer disputes their debt. 

Establish each customer’s ability to pay and allow customers to consider payment proposals 

6.3 Make reasonable enquiries as to the customer’s ability to pay when setting up instalment arrangements and take account of the information given. This should involve the company, customer or debt advisor completing  the standard financial statement promoted by The Money Advice & Pensions Service to  assess realistic payment options. Where companies adapt the SFS (for example, to do checks at scale), they should meet our expectation 1.30 in publishing their methodology (‘Consider how customers’ ability to pay affects their service experience’).  

6.4 Retain an appropriate record of the completed standard financial statement and enquiries made to assess the customer’s ability to pay. 

6.5 Support instalment payment proposals, where the customer has worked with a debt adviser who has prepared a budget using The Standard Financial Statement (SFS). 

6.6 Allow the customer sufficient time to consider any payment proposal and seek free and independent debt advice. 

Refer customers to company’s financial hardship fund or other affordability schemes for help 

6.7 Where a financial hardship fund charitable trust or other affordability support scheme is in place, companies should, where appropriate, tell customers about them or refer customers to a relevant contact.  

6.8 Companies who do not have such schemes should consider the value of establishing them independently or jointly with other companies or utilities.  

Help customers reduce future charges 

6.9 Be able to demonstrate that consideration has been given to whether the customer would benefit from support measures (see support package suggestions in expectation 2.1). For example:  

  • switching to a water meter; 
  • applying for a social tariff where available, or other forms of affordability support or 
  • implementing some water efficiency measures.  

 6.10 Where relevant, the company should advise the customer that they may be able to reduce their future charges and offer information about these options. 

Agree repayment levels that are realistic, understandable and regularly reviewed  

6.11 Set repayment levels which are realistic and sustainable given the customer’s circumstances including taking into account all outgoings. Customers should not be pressured into paying the debt in full or in unreasonably large payments.  

6.12 Try to agree an instalment plan with the customer at a level which recovers the level of the current year’s charges and wherever possible also pays towards the previous years’ arrears (accepting that in most cases payments received will be used to pay off the arrears). This is so that the level of debt does not get progressively worse. However, companies may need to take a long-term view of the period over which customers can clear their debt, based on their knowledge of the customer’s circumstances. Wherever possible, they should try to avoid allowing the debt to increase unless they are convinced that in the customer’s situation it is appropriate to accept any small amount in order to encourage a payment habit. 

6.13 Accept any realistic offer of payment that a customer or the customer’s authorised money advisor makes. Call operators should have the authority to agree payment plans with customers over the phone. Any agreements made should then be confirmed in writing to remind the customer of the commitment made. The level at which direct payments from benefit are set can be a useful guide to setting an appropriate payment arrangement for some customers. However, in cases where the customer has multiple debts, liaison with or referring customers to local advice agencies will be important. 

6.14 Companies are not expected to provide financial advice, but should make it clear to customers whether payments received will be used to pay current charges or towards arrears.  

6.15 Ensure the customer understands their new payment arrangements (including when the debt will be repaid and what to do if they experience difficulties with the arrangement). 

6.16 Monitor arrangements after they have been set up to make sure the customer is content with them. 

6.17 Regularly review and adapt repayment plans as a customer’s situation changes. 

Refer customers to local advice agencies, charities or voluntary organisations for further help 

6.18 Establish and maintain good relationships with local and national advice agencies, charities or voluntary organisations (for example, by offering a dedicated helpline number or direct access for such agencies) and recommend customers consult these agencies where appropriate. Companies should have pro-active debt advice referral approaches in place that go beyond simple signposting which may include transferring customers, with their consent, to debt advice agencies. This is particularly important where company staff are not trained in debt counselling.  

6.19 Where a customer advises a company of their intention to approach a fee-charging company, the company should advise the customer of the existence of similar services that do not make a charge. 

6.20 Offer all customers in debt holistic debt advice. Refer customers to independent, non-charging debt advice agencies, and give full consideration to payment plans that such agencies offer. Where a customer has formally authorised a debt advice agency to negotiate on their behalf, the company should agree to this and should not bypass the agency by contacting the debtor directly. 

Re-engage with customers over missed instalments and make sure follow up action is proportionate 

6.21 Make efforts to re-engage with the customer after an initial occurrence of a failed repayment arrangement 

6.22 Action taken when instalments are missed should be proportionate. 

Next section: Paying Fair Guidelines to support customers facing debt recovery action.   

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