How to adapt your collections strategy, support vulnerable customers, and prove good outcomes under Ofgem’s new outcomes-based regulation.
Record satisfaction against record debt. Sources: Ofgem State of the Energy Market retail highlights, January 2026; Ofgem debt and arrears indicators (combined debt and arrears existing for more than 91 days).
The energy sector has a paradox on its hands. Domestic customer satisfaction hit 82% in August 2025, the highest score since Ofgem began tracking it. At the same time, household energy debt has climbed to £4.79 billion, a new record and the latest in a run of consecutive quarterly increases stretching back three years.
Satisfaction is up. So is debt. And Ofgem’s answer is to stop regulating the process and start regulating the result.
That answer is a set of seven Consumer Outcomes, confirmed in Ofgem’s Consumer Outcomes Strategic Direction, published in June 2026 and modelled in part on the FCA’s Consumer Duty. This is no longer a proposal. Ofgem has decided to adopt outcomes-based regulation for the energy supply market, and implementation has begun. For collections leaders, it means being judged on whether customers in arrears actually end up in a better position, not on whether the letters went out on time.
This guide covers what Ofgem has decided, what the outcomes say about debt, and what collections teams should do now.
The journey to outcomes-based regulation has moved quickly:
The road to outcomes-based regulation. Sources: Ofgem; HM Government Ofgem Review, 2026.
November 2025. Ofgem published its Consumer Outcomes call for input, proposing 24 outcomes, alongside a parallel review of the Guaranteed Standards of Performance.
January 2026. Responses closed on 22 January. Ofgem received 44 responses from suppliers, consumer bodies, charities and industry participants. Energy UK said a more outcomes-based framework could bring benefits in certain areas, while pressing for proportionality. Citizens Advice and Money Advice Trust went further, arguing that prescriptive rules must be retained for high-risk activities such as debt collection, and that Ofgem’s enforcement powers should be strengthened. Nobody argued for the status quo.
May 2026. The government’s Ofgem Review called for a modern regulatory framework delivered by an outcomes-focused regulator, reinforcing the direction.
June 2026. Ofgem published its Consumer Outcomes Strategic Direction, confirming the decision to adopt a more outcomes-based approach and refining the original 24 proposed outcomes down to seven, after consistent feedback that the original set was too complex. Alongside it, Ofgem opened an implementation consultation on putting outcomes-based regulation into practice, starting with billing rules. That consultation closed on 22 July 2026, and Ofgem is now considering responses.
For collections leaders, the question is no longer whether outcomes-based regulation arrives. It has. The questions now are how much prescription survives alongside it in high-risk areas like debt, and how soon your evidence needs to be ready. Implementation is phased and billing is first, but the debt outcome sits waiting in the queue.
The Strategic Direction sets out seven Consumer Outcomes, covering fair value pricing, billing, payment difficulty, complaints, information, switching, and product reliability. They apply to all consumers, domestic and non-domestic, and Ofgem is explicit that vulnerability is a core consideration embedded across all seven, not a separate category. Two matter most for collections teams, and a third deserves a closer look than it usually gets.
All seven outcomes apply to domestic and non-domestic customers. Vulnerability is embedded as a core consideration across all of them.
Outcome 3 is the headline: “Consumers struggling to pay for their energy receive flexible payment options and proactive, tailored interventions.” Ofgem’s supporting explanation is blunt. Poor supplier practice at the early stage of payment difficulty increases financial stress, raises the risk of self-disconnection, and disproportionately harms customers in vulnerable situations. Early and proactive identification and intervention makes a significant difference in preventing debt from building up in the first place or reaching unmanageable levels, and reduces the broader costs of debt for all consumers. When customers do fall into debt, Ofgem expects interventions communicated clearly and with compassion, genuinely tailored to the customer’s circumstances: a more suitable payment arrangement, more flexible ways to pay, or help accessing affordability support and specialist free debt advice.
Outcome 2 covers billing: accurate, timely, accessible and understandable bills. Ofgem draws the causal line itself: when bills are incorrect, late or confusing, customers are more likely to fall into debt. Bills should show the right charges, reflect actual usage, arrive at regular intervals, and use clear, simple language in a format and channel that suits the customer. Billing is also where implementation starts: Ofgem’s first phase of rule reform focuses on existing billing rules, which makes Outcome 2 the live test case for how outcomes-based regulation will work in practice.
Outcome 4 (complaints handled fairly, effectively and promptly) deserves more attention from collections leaders than it might first appear to. Complaints about debt handling, disputed bills that triggered arrears, and prepayment meter installations are among the highest-harm complaints a supplier receives, and Ofgem warns that poor complaint handling is likely to create or exacerbate distress for customers in vulnerable situations, which describes a large share of customers in arrears. There is a monitoring angle too: complaints data is one of the evidence sources Ofgem has named for assessing whether suppliers are delivering good outcomes, so the complaints record is part of how the regulator will judge collections performance, not a separate back-office process. A complaint about collections that lives in one system while the collections activity lives in another is precisely the fragmented evidence problem outcomes-based regulation exposes.
Outcome 7 (products and services that are reliable and perform as intended) also touches collections operations, and because vulnerability runs across all seven outcomes, every one carries an expectation that suppliers consider individual circumstances and needs when deciding how to deliver it. That applies across domestic and non-domestic customers alike, with Ofgem expecting suppliers to tailor their approach to each.
“Early and proactive identification and intervention can make a significant difference in preventing debt from building up in the first place.”
Ofgem, Consumer Outcomes Strategic Direction, June 2026
Outcomes-based regulation does not mean deregulation. Citizens Advice has argued, and Ofgem has acknowledged, that prescriptive rules should remain where consumers are at risk of significant harm. Debt collection sits squarely in that category, and the Strategic Direction confirms the approach: Ofgem will review and rewrite rules to reduce unnecessary prescription while retaining clear protections in higher-risk areas and where consistency is essential.
The result is a hybrid: outcomes-based rules built on the existing Standards of Conduct (SLC 0 for domestic, SLC 0A for non-domestic, both requiring fair treatment), with prescription retained where harm risk is high.
The hybrid model: outcomes-based rules for most activity, prescription kept where harm risk is high, both built on the Standards of Conduct.
For collections teams, the consequence is the same either way. Whether a requirement arrives as a prescriptive rule or an outcome, you will be accountable for evidencing how your processes deliver the result. To the regulator, an outcome you can’t evidence is an outcome you didn’t deliver.
To the regulator, an outcome you can’t evidence is an outcome you didn’t deliver.
Operational compliance with Outcome 3 needs a shift from reactive debt recovery to proactive risk mitigation. Waiting for arrears to build before engaging a customer is no longer a viable strategy, and the data shows why. In Ofgem’s indicators, a customer only counts as in arrears once a bill has gone unpaid for more than 91 days with no arrangement to repay, and as in debt once a repayment arrangement is in place. The headline £4.79 billion is the combined total of both, which means newer unpaid balances appear nowhere in it, and the first 13 weeks is where the intervention opportunity sits. Ofgem’s own debt strategy adds the sharper point: nearly three quarters of that total sits with customers who have no repayment plan in place at all. The same logic extends earlier still, to acting before the first payment is missed: our guide to implementing an effective pre-arrears strategy covers that ground in depth.
The first 13 weeks: where the intervention opportunity sits. Source: Ofgem debt and arrears indicators.
Spotting distress before it becomes debt. Collections technology should flag the micro-behaviours that precede default: subtle payment delays, broken promises to pay, unusual consumption patterns. Each signal should trigger immediate, low-friction outreach, not a place in next month’s batch run.
Tailoring the response to the customer. Interventions should be individualised and proportionate to the customer’s circumstances. A missed payment from a customer with a 10-year clean record is not the same event as a third broken arrangement, and the system should treat them differently without an agent having to remember to.
Building arrangements that last. The measure of a repayment plan is not that it was agreed but that it holds. That means understanding the root cause of non-payment and setting terms the customer can sustain, because a cycle of failed arrangements is a poor outcome by Ofgem’s definition, however good it looks on this month’s collections figures.
Maximising income before setting the plan. Affordability has two sides, and collections conversations usually work only one of them. Billions of pounds in benefits and social tariffs go unclaimed across the UK every year, often by exactly the households sitting in arrears queues. Ofgem names help accessing affordability support as part of a good Outcome 3 intervention, and income maximisation is its most direct form.
A benefits calculator built into the collections system itself, surfaced in the agent conversation and the self-service journey, identifies what a customer is entitled to at the point the affordability conversation is happening, using the income and expenditure information already being gathered. The check alone does not change what the customer can afford today, because entitlements still have to be applied for and awarded. Its value is in what it makes possible: helping the customer apply there and then, and building a review point into the arrangement so the plan adjusts when the new income arrives.
Billing is the first area Ofgem will reform under the new approach, so Outcome 2 will set the template for how outcomes-based rules are written, monitored and enforced. Suppliers should treat billing and payment as part of the collections journey, not a separate function.
Clear information. Bills should be radically simplified. Jargon-free billing reduces the cognitive load on stressed customers and removes the confusion that frequently triggers payment delays.
Payment flexibility. Static monthly billing is a legacy constraint. Customers should be able to align payment frequency with their income: Universal Credit dates, weekly wages, irregular self-employed earnings. Flexible payment options are named explicitly in Outcome 3.
The method side of that flexibility just changed materially. Variable Recurring Payments (VRPs) let a customer authorise recurring payments of varying amounts directly from their bank account, within limits they set and can revoke at any time. In June 2026 the UK Payments Initiative scheme went live with FCA backing, and energy and utilities are in the first wave of eligible sectors. For collections, the fit is obvious. A failed Direct Debit is one of the most common triggers for an account entering arrears, and Direct Debit assumes a fixed amount on a fixed date, which is exactly what a customer in financial difficulty cannot commit to. A VRP arrangement can flex the amount within an agreed cap, match the customer’s pay cycle, and keep the customer in control of the consent, which makes arrangements more likely to hold. The FCA notes these services are already helping customers with irregular incomes manage payment schedules. Suppliers whose collections and payment systems can offer VRP alongside Direct Debit, card and prepayment will have a concrete answer when Ofgem asks how they deliver the flexible payment options Outcome 3 requires.
Root cause investigation. When a payment fails, the supplier should be able to establish quickly whether the cause is a cash-flow blip, a disputed bill, or a vulnerability indicator, and route the account accordingly.
Beyond the day-to-day, three areas carry the highest regulatory and reputational risk.
Prepayment meters and self-disconnection. PPMs remain under intense scrutiny following the force-fitting scandal and Ofgem’s 2023 rule changes, and Ofgem names the risk of self-disconnection directly in its explanation of Outcome 3. A good outcome means vulnerable customers are never moved onto a PPM inappropriately. It also means monitoring smart meter data for sharp drops in consumption, because a sudden drop often signals self-disconnection: a customer who has stopped using energy because they cannot afford to top up. That is a debt distress trigger demanding an immediate, appropriate response, not an inactive account.
Statutory Breathing Space. When a customer enters the Breathing Space scheme, recovery action must pause, interest must freeze, and statutory notifications must go out without manual delay. The scheme applies in England and Wales; Scotland operates its own statutory moratorium with different rules, so GB-wide suppliers need both handled correctly. This is a test of system capability as much as policy, because manual processes introduce exactly the delays the legislation does not allow.
Debt advice: from passive referral to warm handover. Printing a charity’s phone number on the back of a bill does not meet the spirit of compassionate support, and Ofgem’s Outcome 3 explanation names help accessing specialist free debt advice as part of a good outcome. Warm handovers deliver it: with the customer’s consent, secure API-driven data sharing passes their basic financial details directly to the debt advice partner, so a vulnerable customer does not have to repeat a traumatic financial story to a second or third organisation.
The Debt Relief Scheme in numbers. Source: Ofgem Debt Relief Scheme statutory consultation, 2025.
Ofgem’s Debt Relief Scheme, announced in October 2025, will write off up to £500 million of debt for around 200,000 households on means-tested benefits who built up arrears between April 2022 and March 2024.
It’s important for collections teams to be aware that customers will not apply. Suppliers must identify eligible customers automatically from account and payment data, apply the repayment-effort conditions, and evidence every write-off decision. That is only achievable with complete, queryable collections data. A supplier whose collections history lives across spreadsheets, dialler exports and shared inboxes cannot run that identification exercise reliably, let alone defend it to the regulator afterwards.
There is a wider cost story here too. Ofgem estimates unrecovered debt already adds around £52 a year to the average household bill through mutualised costs. Every sustainable arrangement that prevents a write-off protects not just the supplier’s position but every other customer’s bill. Ofgem makes the same point in its explanation of Outcome 3: early intervention reduces the broader costs of debt for all consumers.
“The first missed payment is the cheapest moment to help a customer and the easiest one to miss. Most collections operations are set up to act later than they should, and outcomes regulation is going to expose that.”
James Hill, CEO, Flexys
Customer satisfaction with energy suppliers by financial situation. Source: Ofgem Energy Consumer Satisfaction Survey, July/August 2025.
Ofgem’s July/August 2025 Energy Consumer Satisfaction Survey found that customers classed as highly financially vulnerable reported 71% overall satisfaction with their energy supplier, against 88% for those doing well financially. A 17-point gap, concentrated precisely in the group the new framework is designed to protect. And under the Strategic Direction, vulnerability is not a bolt-on: it is embedded as a core consideration across all seven outcomes, meaning every process a supplier runs is expected to account for individual circumstances and needs.
Closing the gap requires supplier data to work harder. Energy UK has pointed out that suppliers struggle to reliably identify who genuinely needs help without better data sharing from the government. That constraint is real, but it is not a reason to wait. Combining the signals suppliers already hold, including payment behaviour, consumption patterns, contact history and disclosed circumstances, identifies most at-risk customers early enough to act. The suppliers who close the gap will be those whose systems surface vulnerability automatically rather than relying on a customer volunteering it on a difficult phone call.
The Strategic Direction is explicit that this shift is bigger than rule changes: monitoring, compliance and enforcement all move with it, and every change points the same way, towards evidence.
Monitoring shifts from process to outcomes. Ofgem will move its monitoring focus from verifying compliance with detailed rules towards assessing whether suppliers are delivering good outcomes, drawing on a wider range of evidence including consumer research, survey data and complaints data.
Performance goes public. Ofgem intends to make supplier performance more visible, including publishing more supplier performance data where appropriate. Visibility is the point: if performance is observable, suppliers compete on it. Debt handling will stop being a back-office function and become a published differentiator.
Compliance intervenes earlier. Under new Compliance Operating Principles, Ofgem will use outcome monitoring to identify problems quickly and start conversations with suppliers earlier, before issues escalate to enforcement.
Suppliers must demonstrate delivery. The flexibility of outcomes-based regulation comes with a direct trade: suppliers will be expected to clearly demonstrate, to Ofgem and to their customers, how their decisions deliver good consumer outcomes in practice. The call for input floated an FCA-style annual Consumer Outcomes report approved by the board, and whatever final form the reporting takes, energy suppliers should study how lenders have handled Consumer Duty board reporting since 2023, because the discipline is the same.
The KPI shift under outcomes-based regulation.
The KPI implications land directly on collections leadership. Calls made and cash collected remain necessary, but they no longer demonstrate compliance. The metrics that will matter are arrangement sustainability, self-cure rates, time from distress signal to intervention, vulnerable customer satisfaction, and outcome parity between customer groups.
The right preparation question for each outcome is not “do we do this?” but “can we prove it?” A practical self-assessment:
Early intervention. Can you show, account by account, when the first distress signal appeared and what your system did about it, before the account formally entered arrears?
Tailored arrangements. Can you evidence that repayment plans reflect individual circumstances and affordability, and can you report arrangement survival rates over six and twelve months?
Compassionate billing. Can customers change payment method and frequency without agent intervention, and is every change recorded?
Vulnerability. Can you show how a vulnerability flag was raised, what support followed, and how communications were adapted, with a full audit trail?
Breathing Space and statutory schemes. Are pauses, freezes and notifications automated, timestamped and evidenced?
Complaints. When a customer in arrears complains, is the complaint tracked, resolved and evidenced in the same record as the collections activity it relates to, including SLA performance and any escalation to the Energy Ombudsman?
Board reporting. If you had to produce an FCA-style Consumer Outcomes report for your board next quarter, could your current systems supply the data, or would it be a manual trawl?
If several answers are “not yet”, the gap is usually not policy or intent. It is that the evidence lives in too many places, or nowhere at all.
The decision is made, the seven outcomes are published, and implementation has started with billing, with the debt outcome close behind. The suppliers that adapt early will spend the transition improving customer outcomes and cutting cost to collect. The ones that wait will spend it reconstructing evidence.
Flexys builds collections software for UK lenders and utilities. Its clients include banks and finance providers that have operated under the FCA’s Consumer Duty since 2023, evidencing good customer outcomes to their boards and their regulator for three years. The capability energy suppliers now need is the one those lenders already rely on: the complete record of collections activity, including every communication, arrangement, action and decision, with a full audit trail in one system, alongside a customer self-service portal, configurable workflow automation, integrated benefit entitlement checking through its partnership with Inbest, and an optional integrated complaints management module that keeps complaint handling inside the same auditable record. Where clients have deployed the Inbest-powered benefits check, 90% of customers running it found unclaimed benefits they were eligible for, averaging £830 a month, and customers can check and apply without leaving the software. That is the evidence base outcomes-based regulation demands, and the proactive, tailored intervention capability Outcome 3 describes.
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The Strategic Direction sets out seven Consumer Outcomes covering fair value pricing, billing, payment difficulty, complaints, information, switching, and product reliability. They apply to all consumers, domestic and non-domestic, and vulnerability is embedded as a core consideration across all seven.
Ofgem confirmed the decision in its Consumer Outcomes Strategic Direction, published in June 2026, and implementation has begun. It is phased, starting with billing rules. The implementation consultation closed on 22 July 2026, and Ofgem is now considering responses.
Outcome 3 says consumers struggling to pay for their energy should receive flexible payment options and proactive, tailored interventions. Ofgem expects early identification and intervention, communicated clearly and with compassion: a more suitable payment arrangement, more flexible ways to pay, or help accessing affordability support and specialist free debt advice.
This guide describes Ofgem’s published policy and consultations in plain terms and does not constitute legal or compliance advice. Regulatory positions may change as implementation develops. Consult a qualified adviser on how the Consumer Outcomes apply to your organisation.