Charity urges utilities regulators to crack down on aggressive debt collection practices

02 April 2025

Ofcom should act to ensure telecoms firms only disconnect people as an absolute last resort — and Ofgem should prevent energy firms using threats of disconnection to coerce people into complying with unaffordable payment plans.
That is the warning of new research by Martin Lewis’s charity the Money and Mental Health Policy Institute, which reveals people with severe mental illness who are behind on utilities bills are twice as likely to report having been disconnected, compared to those without mental health problems. 
Disconnection can leave people with severe mental illness such as bipolar disorder and schizophrenia, unable to access online banking, benefits or vital support for their mental health.
The charity is also urging firms across the energy, telecoms and water sectors to take action to reduce the unnecessary harms caused by their debt collection practices — from ending the use of threatening debt communications, to improving support for customers who are struggling.

The new research by Money and Mental Health (which is funded by abrdn Financial Fairness Trust) looks at how water, energy and telecoms firms collect debt, and how these processes can be made fairer and more supportive for the 7 million people across the UK who are behind on utilities bills.

In particular, it considers the impact of utilities debt collection practices for people with mental health problems, who are more likely to report being in utilities arrears, struggling to engage with debt collection processes and being disconnected. Money and Mental Health’s analysis of a nationally representative survey of 22,000 people by the Money and Pensions Service shows that:

More than half of people in some form of utilities arrears have a mental health problem (52%). Common symptoms of poor mental health such as memory problems or reduced concentration can make it harder for people to stay on top of bills and to get support if they fall behind.  
In particular, people with severe mental illness such as bipolar disorder or schizophrenia are four times more likely to be behind on some form of utilities arrears than people without mental health problems (35% compared to 8%).
People with severe mental illness are also more likely to have multiple debts, with 7% behind on payments to all three utility sectors, compared to just 1% for those with no mental health problems. 
Money and Mental Health’s analysis shows that nationally, people with severe mental illness who are behind on bills are nearly twice as likely to report that they have had their phone, gas or electricity cut off, compared to people in arrears who don’t have mental health problems (23% vs 13%). 

Current debt collection practices can be damaging to anyone’s mental health, but those already living with severe mental illness are particularly at risk of seeing their mental health problems worsen as a result of harmful debt collection activity. 

Drawing on both the Money and Pensions Service analysis plus an in-depth survey of 244 people with mental health problems who have been in utilities arrears, the research highlights a number of ways that debt collection can drive unnecessary psychological and financial harm:

While disconnection for non-payment is not permitted in the water sector and is extremely rare in the energy sector, Ofcom data indicates it affects tens of thousands of people each month in the telecoms sector. 
The charity’s survey participants described how being cut off from their mobile phone or broadband is leaving them more socially isolated, unable to access banking services and their benefits accounts, and unable to engage with mental health treatment — all of which is compounding financial and psychological harms for this group.
One research participant said: “Not having access to a working phone had a monumental impact on my mental health. Being able to contact friends/family or other services that prevent me from harming myself is necessary but providers say they have no control on restrictions; it's all automatic”. Other participants said that being cut off from internet and their phone had left them feeling suicidal. 
Threatening communications from utilities — including threats of disconnection — are also causing serious distress. While the risk of being disconnected by energy providers is low, research participants reported that threats of disconnection by energy firms significantly worsened their mental health. People often reported that the first communication they received about an energy debt included a threat of disconnection, despite this very rarely happening, although ‘self-disconnection’ remains a real concern (when people on prepayment meters can’t afford to top up their meters).

Money and Mental Health’s research makes a number of recommendations for utilities regulators and firms on actions they can take to reduce the harms resulting from debt collection practices: 

Ofcom should ensure disconnection only happens as a last resort. To make sure this happens, it should introduce a pre-disconnection protocol, setting out a mandatory number of communications firms should make before disconnection happens, and compelling firms to proactively offer forbearance measures to help customers who are struggling. 
All utilities regulators should take action to improve firms’ communications to customers to help recipients access support and engage as necessary. In particular, regulators should mandate that firms avoid using intimidating language and unwarranted threats of disconnection, and instead focus on offering clearer guidance on how customers can get support. 
Firms in all utilities sectors should independently take action to introduce supportive measures. This includes taking action to make it easier for people in vulnerable circumstances to disclose their needs, and ensuring communications are accessible and supportive for everyone. Telecoms firms should take more steps to engage customers before disconnection.

Commenting on the research findings, Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, said: 

“Having access to services such as telecoms and energy is not a ‘nice to have’ - it’s an essential part of being able to live well and engage in society. That’s particularly true for people with severe mental health problems, who are more likely to be isolated, and for whom these services can be an absolute lifeline. Being disconnected from telecoms can mean losing access to your benefits account, to telephone crisis services and to friends and family who help many people with severe mental health problems to stay safe.

“It’s really troubling that so many people with serious mental health problems report either being disconnected, or threatened with disconnection. As this research shows, this is symptomatic of a broader failure by all utilities sectors to engage with and support customers who are in arrears and who might need extra support - and some of the most vulnerable people in society are paying a terrible price for it.

“We need utilities regulators and firms to step up and to prevent more people from facing unnecessary psychological and financial harms when they’re already struggling.”

Mubin Haq, CEO of abrdn Financial Fairness Trust, an independent charitable trust and a funder of the research, said: 

“Our polling on personal finances, the Financial Fairness Tracker, finds that up to half of the population say thinking about their financial situation makes them stressed or anxious. For those with mental health problems, dealing with aggressive debt collection companies can only compound the problem. Companies should stop issuing threatening debt communications and improve their support for customers who are struggling.”

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