Energy regulator Ofgem has imposed penalties totalling £8 million on three suppliers for delaying or missing compensation payments to around 100,000 customers.
E.On Next, Good Energy and Octopus Energy either missed or unduly delayed compensation payments, due if a supplier does not provide a final bill within six weeks when a customer switches to another provider.
In May 2020 the regulator brought in additional Guaranteed Standards of Performance (GSOP) to reduce delays in final billing. Ofgem says this is the first time it has taken compliance action on GSOP compensation delays, in relation to performance on final billing standards.
Compensation under the GSOP is due to clients in cases where:
- transfers between suppliers are delayed
- customers are switched in error, or
- final bills are produced too late
E.On Next was the worst culprit, paying out £5.5 million to almost 95,000 customers. Octopus Energy paid approximately £750,000 to 19,000 customers. Approximately 350 Good Energy shared £18,000.
Ofgem also ordered E.on Next to pay £1.3 m into its Energy Industry Voluntary Redress Scheme (EIVRS), which supports vulnerable consumers. The remaining suppliers paid an additional £0.4 million.
The operators reportedly volunteered their GSOP breaches to the watchdog.
Ofgem introduced the GSOP regulations to encourage suppliers to quickly fix the most harmful switching-related problems. Before 2021, suppliers faced no sanctions for breaching transfer guidelines.
Neil Kenward, the regulator’s director for strategy, said: “Ofgem introduced these standards to make sure customers get the service they deserve when switching energy supplier.
“Our rules mean that where energy companies drag their heels, customers are automatically compensated. We won’t hesitate to hold energy companies to account, as we have done today.
“As the energy market starts to recover, we’ll likely see a return to more switching”, Kenward predicted. “This action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.”