Npower to pay £26m for failing to treat customers fairly

Npower will pay a redress package of £26 million following its billing and complaint handling failures, Ofgem announced today.

The supplier also faces a ban on proactive domestic sales and advertising unless it meets targets for improvements to its billing and customer service, as agreed with the regulator. The news follows heavy financial losses at the supplier and recent comments from the chief financial officer of its parent company, RWE, indicating a forthcoming restructure or even a sale.

The £26 million package will be divided between the worst affected customers and charity.

Npower’s problems stem date from the introduction of a new IT system in 2011. Between September 2013 and December 2014, Npower issued over 500,000 late bills. Some affected customers also received inaccurate bills with little or no detail on how these were calculated.

During this period, Npower customers made over two million complaints with the majority about late or inaccurate bills. Npower often failed to resolve these issues promptly, pursued debts which were in dispute and failed to keep its own commitments to customers on billing, the regulator said. This caused significant distress and worry for many, it added.

Ofgem also found that Npower failed to deal with complaints effectively because of failures with its IT system. For several years, Npower has recorded a significant number of complaints incorrectly, leading to unresolved complaints being logged as resolved and multiple records created for one issue. This created follow-up problems for customers. The supplier did not refer all customers to its complaint handling procedures and in some cases, failed to advise them that they could take their complaint to the Energy Ombudsman if unresolved after eight weeks.

Ofgem chief executive Dermot Nolan said: “Npower failed its customers. Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable. Npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.

“It’s important that all suppliers ensure they follow the principles of treating customers fairly at all times. The payment of £26 million sends a strong message to the industry that we expect them to act quickly and effectively to ensure a good customer experience.”

Simon Stacey, Npower’s managing director, domestic markets, said: “The last few years, since we changed the systems that support our domestic business, have been very disappointing for our customers – and for Npower. We are very sorry about what has happened and that is why we have agreed this significant package of customer redress.

“We’ve reduced complaints by nearly 70 per cent since the beginning of this year and as part of this package of measures with Ofgem, we have agreed targets for significant sustainable customer service improvement that everyone at Npower is working tirelessly to achieve.”