Business customer credit preferences research

We carried out this research to understand how business customers want their credit to be treated, and how their preferences may differ depending on the credit amount, business size, and circumstances. We also wanted to gauge their views on how well their water retailer is communicating information about their credit balances. One of the recommendations in our 5 year review of the business retail market was that businesses should be better protected in the event of a retailer exiting the market, especially with regards to the credit they hold. Customer views on how credit should be treated will help us to work out how to push for more protection in a way that recognises their preferences.

Our findings revealed that the majority of businesses found out about their credit balances directly from their retailer, and most were generally positive about how this is communicated to them. They considered the information to be clear and understandable.

Customers’ expectation for a refund was highest in the scenario where they have received a bill based on an actual meter reading, with the credit equivalent to six months’ charges. There was a lower expectation where the bill received was based on an estimated reading, but for all customers that did expect it, more than two-thirds would prefer an automatic refund from their retailer.

Interestingly, most customers who expect a credit refund where their bill is estimated, would still expect this, despite the possibility they may have to pay it back based on a future bill. There was a particularly strong preference for this among medium and large businesses.

Customers that expected refunds said this view would strengthen if a water retailer became insolvent. This was in the knowledge that in such a scenario their credit may be lost, but also being aware that an insolvency may never occur. The risk to customer credit in a case of retailer insolvency is something we want to be addressed, and this finding indicates that customers recognise the risk too.

We will use the findings from this research to urge Ofwat to take steps to better protect customer credit in the event of a retailer exiting the market, as well as working with retailers to improve communication and access to credit where this is needed.