Ofgem tells energy suppliers to improve help for struggling customers

Energy regulator Ofgem has published its Market Compliance Review of how energy suppliers help customers in payment difficulties and has found issues ranging from minor through to severe weaknesses, or failings.

The research found that, although good practice exists across the industry, with one supplier having no issues, most need to make improvements in processes and governance to meet their obligations. The majority of suppliers were found to have minor or moderate issues and three were found to have ‘severe’ weaknesses – of which two suppliers have been served with immediate enforcement notices.

Given the seriousness of these concerns, Ofgem has already issued Provisional Orders to Utilita and ScottishPower, requiring specific and urgent actions, and the regulator will also consider whether enforcement action is warranted for other suppliers.

The findings found that

• One supplier was found to have no significant issues (British Gas)
• Eight suppliers (Ecotricity, EDF, E.ON, Octopus, OVO, Shell, Utility Warehouse and SO Energy) were found to have ‘minor’ issues
• Five suppliers (E, Good, Green Energy, Outfox and Bulb) were found to have ‘moderate’ weaknesses
• Three suppliers (TruEnergy, Utilita and ScottishPower) were found to demonstrate ‘severe’ weaknesses in the way they deal with customers having payment difficulties, with Utilita and ScottishPower being issued with enforcement notices

Amongst the findings were companies with non-existent policy relating to customers in payment difficulties, a lack of management oversight in the quality of their customer engagement and a lack of adequate training materials.

Energy suppliers have been facing demands of their own over the past year; however, prioritising vulnerable customers struggling to pay their bills during this winter is critical.

Jonathan Brearley, Ofgem CEO, said “This winter will be challenging, especially for those struggling to pay their energy bills. Although the government’s package of support will provide some welcome relief, it’s critical that, going into this tough winter, energy companies prioritise the needs of vulnerable customers struggling to pay their bills.”

“We have reviewed suppliers on how they help customers who are having trouble paying their bills, particularly those who are vulnerable, and found some suppliers have fallen short of the standards Ofgem expects. We accept that there are many pressures on energy companies in the market this winter, but the needs of vulnerable customers must be part of their top priorities. We will now work with companies on where they can improve, and I all urge all suppliers to step up to the challenge.”

In the deep dive across suppliers, although lots of good practice was found, Ofgem found evidence in places that :

• There was a lack of adequate training materials so staff can do their jobs to support customers – (eg customer service operators lacking relevant training in order to ascertain a customer’s vulnerability/circumstances)
• Management oversight on the quality of customer engagement
• Evidence of policies or processes to identify thresholds for important payment plans and how suppliers ensure these are being set in a fair and consistent manner
• Clarity over how payment plans are reassessed if customers’ circumstances change
• Information provided on company structures to understand how issues are identified, raised, and dealt with from ground level to executive level
• Clear company governance, including escalation routes and levels of delegation and decision-making – meaning customer risks are left exposed

As well as publishing the outcome of the review today, Ofgem has also sent a letter to all suppliers outlining the standards expected of them – as well as best practice information.

Commenting on the news Dame Clare Moriarty, Chief Executive of Citizens Advice, said “Today’s review cements what struggling customers already know: some energy companies are falling drastically short of the mark. This is utterly unacceptable given the huge cost-of-living pressures people are facing.”

“Suppliers need to up their game and Ofgem needs to hold them to task. With a tough winter ahead we must also see a ban on backdoor disconnection tactics like pushing people in debt onto prepayment meters.”

Justina Miltienyte, Head of Policy at Uswitch.com, said “This winter is set to be extremely difficult for vulnerable households, and it’s never been more important that energy suppliers meet their obligations to customers in payment difficulties.”

“It is deeply concerning that some suppliers are still not adequately prepared to serve customers who struggle to pay their bills. Not having a policy for dealing with customers in payment difficulties, among other things, is unacceptable, and must be urgently addressed.”

“Even with the Government’s help, people still face high energy bills this winter that many will find difficult to pay. There is no excuse for suppliers to not support their customers.”

“Already, energy debt is at an all-time high with £1.3 billion owed to providers, nearly three times higher than it was in September last year.”