Watchdog warns energy firms to improve treatment of struggling customers
The review by regulator Ofgem found that the majority of firms were unable to identify customers who had trouble making payments and there was a lack of help given to those struggling to pay.
Three suppliers, TruEnergy, Utilita, and ScottishPower, had severe weaknesses in the way they deal with customers who have payment difficulties.
In response to the review, Utilita and ScottishPower were issued with enforcement notices. These detail specific requirements both firms need to fulfill.
Five energy firms, E, Good, Green Energy, Outfox and Bulb, were found to have some issues with the support they provide to customers.
Meanwhile, eight companies, Ecotricity, EDF, E.ON, Octopus, OVO, Shell, UW and SO Energy, were found to have minor issues.
Only one supplier, British Gas, was found to have no issues.
Energy cap comes in but customers still struggling
This weekend the government’s energy price guarantee comes in and this will cap the price charged by suppliers at £2,500. Yet this is still significantly more than most consumers paid last year, or even six months ago.
Therefore the number of customers struggling to pay is expected to increase, meaning it will become even more important for providers to treat them fairly.
A ScottishPower spokesperson said: “We’re disappointed that all of the effort our staff make to help our customers manage affordability challenges has resulted in this conclusion from Ofgem.
“We will now work with Ofgem to implement their recommendations.”
A Utilita spokesperson said: “We’re very disappointed in the conclusions Ofgem has made following its latest Market Compliance Review, especially its decision to issue a Provisional Order rather than to engage with us.
“We remain in discussions with Ofgem to further explore the concerns raised. Our staff are deeply committed to helping customers through the cost-of-living crisis and the financial support we offer is extensive: In 2022 alone, we will provide financial assistance more than a million times to customers who need our help.”
Lack of customer training to identify vulnerable customers
This review was focussed on how companies identify and help customers who are struggling to pay.
Ofgem found that some companies did not have any policies in place to help customers in payment difficulties while others were described as having a lack of management oversight in relation to training of staff to identify vulnerable customers.
It also said there was a lack of clarity from some firms on what happens if a customer’s situation changes in relation to their payment plan.
All of the companies, apart from British Gas, have been asked to submit information to Ofgem detailing how they intend to improve their services. It will then decide if enforcement action is warranted.
Ofgem said it has sent a letter to all suppliers outlining the standards expected of them.
Prioritising vulnerable customers is critical
Ofgem acknowledged that while energy suppliers had been facing high demands in the last year, protecting vulnerable customers who struggle to pay their bills was critical.
Jonathan Brearley, Ofgem CEO, said: “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 urge all suppliers to step up to the challenge.”
The review today comes as Citizens Advice said the number of Ofgem staff working to protect customers from poor supplier practice fell 25% between 2017/18 and 2020/21. It also said it supported 15,000 people by the end of August who were unable to top up a prepayment meter.
The charity is now urging Ofgem to introduce a Consumer Duty to ensure providers offer a service which meets the needs of all customers.
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.”