Ofgem closes compliance engagement with E (Gas and Electricity) Limited in relation to transfer blocking
Decision
- Publication date
- Industry sector
- Supply and Retail Market
Ofgem has closed compliance engagement with E (Gas and Electricity) Limited (“E”) after the supplier incorrectly blocked 361 prepayment (PPM) customers who had received a discretionary credit from switching to another supplier. Following this engagement, E has committed to return the financial value of lost savings to all affected customers and has taken steps to ensure future compliance.
In order to support vulnerable PPM energy customers and keep them on supply, energy suppliers can offer customers a discretionary credit payment. This typically involves the supplier issuing a value of energy credit in advance which is later recovered from the customer in instalments from future energy top-ups. In late April 2020, Ofgem became aware that E had taken a decision to adjust its discretionary credit process as part of its Covid-19 response. In order to receive discretionary credit, customers were asked to enter an agreement to repay any credit value still owed to E before requesting a switch to another supplier. Approximately 5,300 customers entered into the agreement between 19 March 2020 and 13 May 2020. The supplier made this change following a sharp rise in requests for discretionary credit which was triggered by the impacts of Covid-19. However, Standard Licence Condition (SLC) 14 prohibits suppliers from preventing a proposed customer transfer with the exception of specific circumstances described in the condition. The protections extended by the SLCs cannot be superseded by separate arrangements between suppliers and their customers.
E voluntarily stopped requiring customers to enter into the agreement after demand for discretionary credit returned to pre Covid-19 levels in early May 2020. We engaged with E to assess any financial detriment that customers may have suffered as a result of the agreement. E identified a total of 361 customers who attempted to switch energy supplier while bound to the agreement. E has agreed to credit a total sum of £1,840 to the affected customers. The supplier also released approximately 580 customers from the agreement who had not yet repaid the value of credit on 19 June 2020.
The ability for customers to readily switch energy supplier is a key element for effective competition in the energy market. Suppliers should not take any actions that prohibit customers from switching energy supplier other than those circumstances outlined in SLC14.
While Ofgem takes any non-compliant transfer blocking activity seriously, we consider that in this instance the return to compliance and the refunding of customers is sufficient to end our compliance engagement. We have taken this decision in line with the pragmatic approach to regulation during Covid-19 we set out in our Open Letter of 8 April, under which we endeavoured not to penalise suppliers for actions or decisions taken with the aim of protecting or supporting their customers.