It’s not that often a regulator does something to encourage more use of data, rather than less. Yet that is what should have happened in the wake of Ofgem’s insistence in February that the six biggest energy suppliers should make stronger efforts to repay over £400 million they hold in over-payments from former customers.
It’s an eye-watering sum and should mean the suppression data marketplace is now booming. Help is certainly needed to re-ignite use of goneaway and deceased files - a market which DataIQ research in 2012 identified as relatively static at around £18.4 million. Despite the best efforts and innovations by suppression data owners, it has been difficult to drive new adoption and improve data hygiene standards.
That much is obvious from what Ofgem had to say about British Gas, SSE, EDF Energy, RWE npower, E.ON and Scottish Power. As a group, they were not doing enough to ensure over-payments were being returned, £202 million from closed accounts of former domestic customers and £204 million from former non-domestic customers.
Is tracking a consumer or business which has closed an account and moved on that difficult? Not according to the suppression data providers. To take just one example, Royal Mail’s National Change of Address file has over 35 million names and addresses dating back to 1995. That’s 18 years’ worth of information which connects old with new addresses. Even if you argue that this file only picks up addresses which register for their mail to be forwarded (something like half of all people and companies that move), other sources from Equifax, Experian and The Data Agency can fill in the gaps.
Among movers, there will admittedly be some which are hard to track. Transient households, such as students in multi-occupancy dwellings, for example, or commercial investment companies that hold a lease and have subsequently gone bust or been acquired/merged into another business.
Yet this argument does not hold. At a consumer level, these types of customers are often using energy key cards which they top-up as they go, rather than paying into a rolling account through direct debit. Most businesses are swift to collect any money they are owed and to minimised outgoings where possible.
So is the obstacle to finding these former customers and giving them their money back the cost of using suppression data? Prices for reconnecting in this way vary by both provider and the size of the deal, with a potential range from 7p up to 75p per record, depending on how it will be used.
Assuming an upper-end cost of 50p - these missing customers are perhaps the hardest to find and will incur higher processing and matching costs as a result - and a target group of say 2 million customers, the entire Ofgem tracking project would come in at £1 million. That is just 0.25 per cent of the money owed. Chances are the utilities have earned more than that in interest payments.
And this might be the ultimate explanation for the failure to find people that are owed money. Holding onto cash may be written into the business strategy. After all, this is how the utilities operate with direct debit payments, ensuring customers are building up a credit balance that never gets paid back.
Even if that is too cynical, the same companies have a cast-iron reason for adopting more effective suppression - they claim five million households owe £637 million, some of them customers who have moved away without settling their bill. Whichever way you look at it, there are millions of reasons why the suppression data market should be on the up.