UK regulators publish joint debt collection statement

The Financial Conduct Authority, Ofgem, Ofwat and Ofcom published a joint debt collection statement in March 2024 through the UK Regulators' Network, in which the regulators set out four outcomes that they expect firms to deliver in relation to debt collection¹.

The statement was noted by Consumer Scotland, the statutory body for consumers in Scotland, in its response to an Ofgem call for input on affordability and debt in the domestic retail market, published on 16 May 2024¹. Consumer Scotland is established by the Consumer Scotland Act 2020 and is accountable to the Scottish Parliament¹.

The four outcomes themselves are not set out in the Consumer Scotland document, which records only that the regulators expect firms to deliver four outcomes on debt collection¹.

Energy debt in context

Consumer Scotland's response cites Ofgem's figure that energy debt in the Great Britain market stands at over £3bn, a record level¹. It argues that the aggregate debt burden is likely to be higher than the reported £3.1bn within the retail energy market, because consumers also borrow from family and friends, take out loans or miss rent or mortgage payments to pay for energy¹.

Its Energy Affordability Tracker, which surveyed 1,609 domestic consumers in Scotland in February 2024, found that more than one in twelve (9%) of households in Scotland are in energy debt, using a broad definition that includes borrowing and arrears¹. Of those in energy debt, around 15% said they faced debt recovery action, and forty-eight percent were not confident they would be able to clear the debt¹.

The tracker analysis found that low income, having a child under five and disability were most associated with energy indebtedness¹:

Source: Consumer Scotland analysis of Energy Affordability Tracker data¹. The figures control for other variables.

The response also cites the Energy UK Winter 2023 Voluntary Debt Commitment, under which signatories committed to fully consider information including budgets, affordable payment offers and prepared Standard Financial Statements, and third-party authority forms, from a customer's chosen credible debt or consumer body¹.

Why it matters for households

The statement is addressed to firms rather than consumers, and the Consumer Scotland document does not describe how the four expected outcomes will be enforced or what they require of individual companies¹. What it records is that four regulators covering financial services, energy, water and communications have jointly stated expectations on how debts are collected¹.

For households in arrears, the practical picture set out by Consumer Scotland is that debt recovery action is already a reality for a share of those in energy debt: around 15% of consumers in energy debt told its survey they faced such action, and forty-eight percent were not confident of clearing what they owe¹. The same research identifies payment method as relevant, finding that prepayment customers are more likely to report owing money to someone else to cover energy costs, debt that may not be counted when suppliers assess ability to pay and set repayment plans¹.

Consumer Scotland also notes that a household in Scotland is defined as being in fuel poverty if necessary fuel costs exceed 10% of income and remaining income after essential costs is insufficient for a reasonable standard of living, measured against less than 90% of the Minimum Income Standard¹.

What happens next

Consumer Scotland's response was published on 16 May 2024¹. It states that heat networks are scheduled to become a regulated industry in April 2025, with Consumer Scotland as the statutory advocate for heat network consumers in Scotland¹. No further steps on the joint debt collection statement are set out in the document¹.

Consumers who want to understand how regulators make and enforce rules can read our guide to financial regulation in the UK, and our debt section covers arrears and repayment. Complaint figures published by firms are explained in our guide to complaints data.