Customers to receive automatic compensation for mistaken switches

Starting in May, energy customers who suffer delayed or mistaken switches will automatically receive £30 in compensation from their supplier, Ofgem has confirmed.

Following a consultation last September, the energy regulator announced today (12 February) that the payment will also apply to customers who do not receive their final bill within six weeks.

Ofgem said the new requirements, which are known as guaranteed standards, should serve as a “wake-up call for suppliers to cut out problems for customers and get switching right first time”.

From 1 May, customers whose switch is not completed within 15 working days or are switched to a supplier by mistake will receive the compensation payment from the new supplier. The old supplier must pay out if it fails to issue a final bill within six weeks of a correct switch.

Suppliers have already been required since May 2019 to make compensation payments to customers if they fail to promptly correct an erroneous switch or return their credit balance within 15 days of a final bill being issued.

Under the new rules announced today, customers will receive £30 in the event of any erroneous transfer, regardless of how quickly it is corrected. They can also receive multiple payments for multiple failures.

Customers have already received more than £700,000 in compensation payments from suppliers so far.

Of these payments, 27 per cent have been for mistaken switches, while the majority (73 per cent) have been for late credit balance refunds.

Mary Starks, executive director for consumers and markets at Ofgem, said: “More customers are switching than ever, with a record 6.4 million changing supplier in 2019. But we also know that a minority can still experience problems when they switch.

“As part of our commitment to protecting consumers and enabling competition, we are introducing these new standards to give customers further peace of mind, and to challenge suppliers to get it right first time.

“Going forward, we will continue working with suppliers and consumer groups to deliver our programme for faster and more reliable switching and ensure these arrangements are fit for the future.”

Minister for energy and clean growth Kwasi Kwarteng said: “These tough new standards will ensure switching is as smooth as possible and consumers are always protected.”

Also welcoming the move was David Pilling, head of policy and public affairs at the Energy Ombudsman. The Ombudsman says switching is second to billing as a source of complaints among those it handles.

Pilling added: “The introduction of automatic compensation is a welcome intervention by the regulator.

“It offers consumers access to immediate redress and gives suppliers a financial incentive to get switches right first time.

“At the same time we think it’s vital that, as well as paying compensation, energy suppliers look at what went wrong with the switch and make improvements to their processes.

“It’s in this root-cause analysis and pro-active work to raise standards across the sector that we see our role as the ombudsman.”