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An independent expert body will manage redress payments from energy companies under new changes from Ofgem.
The regulator will initiate an open procurement process early next year to appoint a third party organisation and a decision will be announced by summer 2017.
The changes are being implemented in a bid to ensure that these redress payments deliver maximum benefit for consumers and make the process as “robust and transparent as possible”.
When an energy company faces a financial penalty following enforcement action from Ofgem, it can voluntarily make additional redress payments to help energy consumers. Currently, the payments must be agreed with Ofgem and can be made through charities, trusts and third party organisations.
In December last year, Ofgem required big six supplier Npower to pay a record fine of £26 million as a consumer redress package due to failures handling complaints effectively. In April 2016, Scottish Power was fined for not treating its customers fairly and agreed to pay £18 million, of which £15 million would be paid to customers affected by the issues and the remainder to charity.
Ofgem notes that, in 2014 and 2015, £73.5 million was given to charities and 223,000 energy consumers benefited as a result. This was in addition to compensation that companies paid back to directly affected customers during this period.
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