Credit, Collections & Insolvency News
Energy regulator Ofgem has announced that 18 supplier firms failed to correctly protect customers’ tariff prices when they decided to either switch suppliers or tariffs after a price increase.
The investigation found that over 1 million customers were overcharged over £7.2 million for the failings. Collectively, the suppliers are issuing refunds and redress payments worth £10.4 million.
Several of the suppliers self-reported the issue to Ofgem. All suppliers were then requested to self-assess their practices, which revealed that 18 suppliers were not compliant between 2013-2020.
The customers affected included:
those on a standard variable tariff who switched to another supplier but did not have their variable tariff price-protected during the switch,
customers on a fixed-term tariff who switched to another supplier but did not have their fixed-term tariff protected during the switch, and
customers on a fixed-term tariff who moved to another tariff with their supplier but did not have their fixed-term tariff protected during the switch.
Most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.
The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, to the tune of £10.4 million. Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.
Ofgem made clear to suppliers that customers’ tariffs are protected while either switching suppliers or tariffs and they need to ensure their systems, processes and practices are fit for purpose.
Ofgem expects all suppliers to ensure that they comply with these requirements and if further non-compliance is identified, Ofgem will be likely to take formal action.
Ofgem has now closed this compliance engagement without taking formal enforcement action, taking into account the suppliers’ cooperation with Ofgem, and the steps they have taken to address their failings.
Anna Rossington, Interim Director of retail at Ofgem said “Customers should have confidence in switching and not be overcharged when doing so. This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.”
“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”
Natalie Hitchins, Head of Home Products and Services at Which?, said “It is right the regulator has intervened and sent a clear message to suppliers that this kind of behaviour is unacceptable. Firms must now act quickly to help affected customers, making it clear who is owed a refund and then doing so swiftly and without hassle.”
“Energy customers have already been left reeling by an increase to the price cap which allows suppliers to raise the prices of their default tariffs to where they were before the pandemic, risking further strain on households struggling with rising bills due to increased usage during lockdown.”
“Switching is still the best way to save money, so anyone looking for a better deal or improved customer service should look to change suppliers – you could save more than £150 a year.”
The suppliers, number of customers affected, and redress payments are as follows:
| Supplier | Number of customers affected | Total Detriment (£) | Total Redress Package |
| Bristol Energy | 12,617 | £55,982.64 | £56,552.64 |
| British Gas/ Centrica | 141,415 | £391,176.79 | £1,269,095.47 |
| E (Gas and Electricity) | 20,870 | £68,777.23 | £ 72,772.93 |
| E.On | 28,126 | £181,668.29 | £238,884.29 |
| EDF | 79,083 | £465,441.36 | £ 516,191.55 |
| Engie | 9,061 | £12,803.98 | £21,218.74 |
| ESB Energy | 1,961 | £35,102.00 | £49,787.00 |
| Green Star Energy | 79,083 | £664,661.00 | £808,351.00 |
| npower | 2,030 | £24,207.69 | £25,602.69 |
| Octopus Energy | 19,712 | £59,902.15 | £121,444.52 |
| Orbit | 723 | £5,539.25 | £7,081.12 |
| OVO Energy | 240,563 | £2,001,196.45 | £2,801,231.51 |
| PFP Energy | 5,347 | £35,204.31 | £50,929.31 |
| Scottish Power | 157,236 | £1,449,835.28 | £1,967,465.28 |
| Shell | 225,823 | £1,001,203.40 | £1,217,203.40 |
| So Energy | 10,514 | £59,723.56 | £ 78,480.89 |
| SSE | 132,620 | £713,973.86 | £983,334.45 |
| Utility Warehouse | 2,723 | £62,783.92 | £95,512.15 |