Ofgem has found that the majority of energy suppliers have minor, moderate or severe weaknesses in their current practices towards customers.
Published within its Market Compliance Review, which explored how suppliers help customers in payment difficulties, three suppliers have been identified in having severe weaknesses, eight suppliers have minor, five have moderate issues with just one supplier having no issues at all.
Ecotricity, EDF, E.ON, Octopus, OVO, Shell, UW Energy and the merged So Energy and ESB, have been identified as suppliers with minor issues in current practices towards customers.
E Gas & Electricity, Good Energy, Green Energy, Outfox and Bulb were amongst those who had moderate issues with the support they have been providing their customers.
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.
The only energy supplier to have no significant issues was British Gas.
“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,” said Jonathan Brearley, CEO of Ofgem.
“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.”
Protecting customers has become a hotly debated topic amid the current energy crisis. To cater for this, The UK government has already laid out measures to mitigate the impact of the energy crisis via the introduction of the Energy Price Guarantee from 1 October. This will see the average domestic energy bill at £2,500 by setting the unit prices at 34.0p/kWh for electricity and 10.3p/kWh for gas for variable tariffs. This is expected to cost upwards of £100 billion.
However, many households will struggle to pay their energy bills despite these measures implemented by the government. Energy suppliers have a huge role to play in ensuring vulnerable customers will be supported.
“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,” Brearley added.
The deep dive review stated 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”.
Amongst the findings were companies that had non-existing policies related to customers in payment difficulties, a lack of management oversight in the quality of customer engagement and a lack of adequate training materials.
Alongside this, there was a lack of clarity over how payment plans are reassessed if customer circumstances change as well as 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
Because of this, more must be done by energy suppliers to ease the pressure on households this winter and the future. The firms have an obligation to protect households which could become under increased pressure amid the high wholesale gas crisis.
Ofgem itself has not been absent from being reminded of its duties to protect households. Earlier this year, the organisation was called upon to increase support for vulnerable households with The Good Law Project having threatened Ofgem with court action if it failed to comply with its legal duties to protect vulnerable customers amid plans to raise the energy price cap in mid-August.
This escalated when Ofgem announced an energy price cap rise to £3,549 per year in late-August prompting The Good Law Project, Fuel Poverty Action and the Highlands & Islands Housing Association’s Affordable Warmth Group to issue plans to sue Ofgem on allegations it has “failed to mitigate the impact of rising energy bills on consumers”.
In order to solve the outlying issues, Ofgem has stated it has sent a letter to all suppliers outlining the standards that are expected of them alongside best practices information. The next market review will look at customer vulnerability and will be published later this year.