Ofgem Review Reveals that Customer Service Standards of Energy Suppliers Must Improve

Source: www.gulfoilandgas.com 2/2/2023, Location: Europe

Eenergy regulator Ofgem has published supplier ratings from its fourth ‘deep dive’ into energy supplier standards. The Market Compliance Reviews are proactive, market-wide assessments of energy suppliers’ performance on key areas.

This latest review looked at customer service and complaints performance from information submitted by 17 of the biggest domestic energy suppliers.

Ofgem has also launched a separate urgent investigation into practices at British Gas and its treatment of vulnerable customers, which is outside the scope of the findings from this review.

This is alongside an upcoming future market review, announced last month, which will look in more detail at Pre-Payment meters (PPMs) and the issue of forced PPM installation and remote switching from credit to PPM through smart meters, and how the whole industry handles this issue. This was outlined in the recent letter from Ofgem CEO Jonathan Brearley to BEIS Secretary of State Grant Shapps. The energy regulator will start requiring data from suppliers on this shortly.

The latest review, published today, looked at customer service and complaints performance from information submitted by 17 of the biggest domestic energy suppliers. The review found:

Weak policies and pathways for customer service journey, including incomplete communications to customers in relation to complaints
Inconsistent scripts for staff handling complex calls
Customers left waiting for hours on the phone on several occasions
Phone calls simply not picked up and slow responses on written customer contacts
Up to 50% of customers giving up and hanging up calls as not answered
High rates of customer complaints upheld by the Energy Ombudsman
Incomplete management information being used to monitor performance, and
Weaknesses in customer service agents’ training and/or quality control mechanisms.

As a result of the review, Ofgem found the following about specific companies:
Severe weaknesses at E.ON, resulting in specific enforcement action – a Provisional Order being issued (detail below)
Moderate weaknesses at 11 suppliers (British Gas, E Gas & Electricity, EDF, Good Energy, Outfox the Market, OVO, ScottishPower, SO Energy, Utilita, Utility Warehouse and Tru Energy).
Minor weaknesses at five suppliers (Bulb, Ecotricity, Green Energy, Shell and Octopus)
No suppliers had ‘no weaknesses’ at all.

Ofgem communicated the ratings to all suppliers in the last few weeks and, since then, has started compliance engagement on areas needing improvement.

These deep dive reviews undertaken are part of Ofgem’s strategy to drive up performance by energy suppliers and are yielding progress in terms of the improvements already made as a result.

Neil Lawrence, Director of Retail at Ofgem, said:
“From being on hold for too long, to not being given clear information, or sometimes not getting through to suppliers at all, this review has highlighted that customer service is just not good enough. In a world where customers need to be confident in consistently great care and support, it is clear that improvements need to be made.

“We also know from talking to suppliers that the calls they are getting are more and more complex. But we expect suppliers to respond dynamically to this, updating processes, call handling scripts and having enough people to deal with the current issues and complexities.

“The ask on suppliers may be greater due to these complexities but it’s clear today that some suppliers have risen to the challenge better than others.

“This isn't just about the energy industry in isolation; this is about raising standards, so we are in line with other customer retail standards - getting waiting times down, making sure calls are answered and being able to give helpful information about a critical service.

“I want to see further improvement action as a result of today’s findings, and we will take further, firm action where this doesn’t happen.”

Customer satisfaction survey
Ofgem’s findings on this review tally with what customers themselves are reporting. Early indications from a recent Energy Satisfaction survey of 3,000 domestic energy consumers show that in November-December 2022, overall customer satisfaction with energy suppliers was amongst the worst ever seen since tracking began in 2018.

This survey, funded by Citizens’ Advice and Ofgem, and carried out by Quadrangle Research, found that a fifth of consumers who had fallen behind on paying their bills felt they did not receive appropriate support for their needs. Moreover, one in 14 consumers who pay by prepayment meter say they did not receive any support when they contacted their supplier for help with their energy costs.

At the same time, the survey also showed that consumers are finding it difficult to reach their supplier. A quarter of respondents said that it was difficult to contact their supplier via their preferred channel – a record high since tracking began in 2018. Early findings also suggest the reasons for customer contact are becoming more complex too, meaning that calls are taking longer to resolve.

Suppliers are also getting more calls - with some suppliers reporting that call numbers are up by 300%.

Most customers are not switching supplier in the current climate, so customer power is less able to drive improvements, meaning it is more critical than ever that the regulator ensures standards are maintained.

Ofgem is also examining where it can introduce stronger, more prescriptive minimum consumer standards - working with government, consumer groups and suppliers to make sure customers are protected.

Provisional Order
As part of this review, Ofgem has issued E.ON Next Energy Limited (“E.ON”) with a Provisional Order, to address the severe weaknesses found in the customer service provided to its customers. E.ON is an energy supplier serving 4.6 million domestic electricity customer accounts and 3.1 million domestic gas customer accounts across GB.

E.ON’s performance on call waiting times and abandoned call rates was very poor and represented a severe deterioration in standards from when Ofgem previously analysed their performance. Considering the current market circumstances and rising costs to consumers, it is likely that more customers will need to contact their supplier for advice on billing, payment options and payment difficulties, energy efficiency advice and debt. For this reason, Ofgem considers it necessary to address this issue quickly, bringing E.ON into compliance with its licence conditions through a Provisional Order. E.ON are now to undertake actions to make improvements and Ofgem will be monitoring these closely, as it is crucial that underlying causes are addressed and customers receive an adequate service.

Progress so far from previous Ofgem reviews
Ofgem’s Market Compliance Reviews are working- and are yielding positive results for customers since they launched last year. One of the biggest areas of supplier improvement, driven by Ofgem’s proactive action, has been in the way that suppliers set and manage direct debits. Specific examples include:
Ofgem requested all suppliers who increased a direct debit by more than 100% between February and April, look at these again. This resulted in almost a million customers having their direct debits reviewed, adjustments made for any miscalculations, including potential repayments, and consideration of whether goodwill payments were warranted.

Compensation actions are progressing (£117,580 paid out to date)
In total, Ofgem identified 56 concerns across the market resulting in 12 formal compliance engagements, one of which progressed to an enforcement order. To date, 53 of those concerns have been resolved to Ofgem’s satisfaction (95%).
Suppliers have tightened and improved their processes linked to setting direct debits and issuing customer refunds, to help ensure consumers continue to pay the correct amount for their energy and promptly receive any refunds due, leading to increased customer confidence in these areas.
The open, transformative and cooperative approach that suppliers have taken to monitoring the risk of vulnerable customers, strengthening governance around processes and controls; improvements around their Priority Service Registers (PSR) is also welcomed.

Next steps on the back of today’s review:
Where necessary, Ofgem will now require suppliers to make improvements to ensure they provide good customer service. Since Ofgem's initial assessment and ratings were formed, many suppliers have already responded positively based on the feedback from the review.

All the action taken from all the Market Compliance Reviews so far can now be seen collectively.

Additional possible future compliance action includes:
Enhanced monitoring of suppliers with severe weaknesses
Robust compliance actions on all noted concerns to ensure supplier improvement
Liaison with the Ofgem enforcement team on additional supporting enforcement action (where needed)
Regular monitoring of key call centre and contact performance stats to ensure suppliers improve where needed
Robust Ofgem minimum consumer standards being developed
Supplier licences can be revoked if necessary

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