Rudd to give ombudsman ‘real teeth’ to solve systemic issues

The energy ombudsman will be given stronger powers to crack down on energy companies who are routinely failing their customers, energy secretary Amber Rudd has announced.

In her speech to the Conservative party conference Rudd said the ombudsman would be given “real teeth” to investigate “systemic issues in the industry” rather than just isolated instances.

Rudd said: “Where companies have developed a pattern of bad behaviour, they will have no hiding place.”

Only last week a strategic review of the Ombudsman Services Energy (OSE) commissioned by the regulator Ofgem said the ombudsman could do more to solve industry-wide issues rather than just on a case-by-case basis.

It identified a role for OSE in using complaint data to reduce the root cause of complaints, saying OSE had intervened on occasion where it had identified patterns of behaviour that are of concern, but “has not done so systematically or always captured evidence of this or reported it to Ofgem.”

Rudd said the Department for Energy and Climate Change will work with Ofgem and Citizens Advice to define OSE’s future role.

“We are on the side of consumers, we are doing this so consumers receive better treatment and we can build more trust in the industry.”

Citizens Advice’s chief executive Gillian Guy said the 100,000 energy issues it helps customers deal with every year shows firms aren’t learning lessons.

“Too often complaints are dealt with in isolation which means systematic failures across the energy industry are not properly addressed.

“The Government’s announcement that it will strengthen the role of the energy ombudsman with the help of Citizens Advice and Ofgem is encouraging news and will hopefully help to create a market that works better in the interests of customers,” Guy said.

The review also said that it expects OSE’s case mix to evolve over time from the current situation of a high volume of cases, to fewer harder to resolve cases, but that it was not clear that the OSE had considered this scenario in its future planning.

In response to the review Ombudsman Services said: “We have made a number of recommendations within the energy sector and we will continue to call for change, which ultimately benefits consumers. For example in May we introduced new requirements that mean that failure to implement remedies in full within 28 days are met with tougher financial penalties.

“We have encouraged energy companies to improve their billing, and we have made detailed recommendations to the CMA’s investigation into the energy sector.”