Ofgem to allow Ovo’s bonus credit deal

Ofgem said on Thursday it will allow Ovo Energy to offer customers an interest rate bonus on account balances which are in credit.

The independent supplier argued earlier this year that it should be allowed an exception to Ofgem’s stringent retail market rules in order to offer a 3 per cent bonus to direct debit customers with an account in credit.

Under its recently introduced rules Ofgem hopes to increase consumer engagement, by reducing tariff complexity, in order to stimulate competition in the market.

But following a derogation review the regulator has agreed that the deal does not increase complexity in consumer’s decision making, adding that the deal “is beneficial to consumers”.

Ovo Energy’s head of corporate affairs, Jessica Lennard said in a statment that the regulator’s decision is “pragmatic” and “fair”.

“Regulations should work in customers’ best interests, but it never felt right to us that the rules allow a supplier to charge interest when an account is in debit, but not reward customers when they are in credit,” Lennard said.

Over 2014 the company said it paid out over £1.3 million in interest to nearly 350,000 customer accounts.

“We set out to make the energy market a fairer, happier place for customers and the interest reward is something they have always told us is really important to them, so we were committed to fighting for it,” Lennard added.

Ofgem has added that the supplier should now do more to communicate to its customers the details around the interest bonus and how it is paid.