- Publication date
- 28th June 2018
- Information types
- Policy areas
Compliance engagement with SSE and Robin Hood Energy on meeting the requirements of their gas and electricity supply licences (Conditions 22, 22D and 25) when changing white label provider. Case closure note.
Ofgem has undertaken compliance action with SSE and Robin Hood Energy with regards to issues relating to their relationships with the white label Ebico in 2017. SSE failed to comply with Supplier Licence Condition 22D (SLC 22D), in that when suppliers remove a tariff from the market, they must migrate customers onto fixed term or evergreen tariffs within 49 days. Ofgem’s compliance team also engaged with Robin Hood Energy to ensure that customers were only switched to their supply following consumer consent.
At the end of 2016 Ebico terminated its white label partnership with SSE. Contractual arrangements between SSE and Ebico provided for a long winding-down period of several months after the decision. Ebico entered into a new partnership with Robin Hood Energy in January 2017.
Around the same time, in January 2017, Ebico informed all the customers of the Ebico-SSE white label tariffs that they would be automatically transferred to a better deal with Robin Hood Energy. This would have contravened the licence (Supply License Conditions 22 and 25) in that these were customers of SSE and as such would need to give their consent to switch to another licenced supplier. Ofgem engaged all parties to make them aware of their obligations and responsibilities to allow consumers an informed choice.
Robin Hood Energy, working with Ebico, then revised their approach. In March 2017 they asked customers of the Ebico-SSE white label tariffs for their consent to switch. Those who did not give consent would remain customers of SSE.
On 24 February 2017, SSE withdrew the Ebico tariffs from sale and looked at potential options for continuing supply to its 35,000 customers who were on the Ebico-SSE white label tariffs.
Under Ofgem’s rules, customers can be subject to a dead tariff only for a transitional period of up to 49 days, meaning that to comply SSE should have migrated these customers to a live fixed or evergreen tariff by 24 April (within 49 days of withdrawing the tariff).
However, SSE took until 29 August to migrate the overwhelming majority of these customers to an alternative tariff. During this time, customers continued to be subject to Ebico-SSE white label dead tariffs. Through compliance discussions with Ofgem in this period, SSE explained that they were exploring other arrangements, including re-opening these tariffs.
Following compliance action by Ofgem, SSE agreed to pay £190,000 to those affected customers who would have been better off after migration to compensate for the delay. In addition, SSE made a goodwill gesture payment of £475,000 to customers who had benefited from the delay due to their energy costs being higher with the new tariff. This additional payment was based on the difference between the old and new tariff prices, calculated over a 6 month period following migration. In respect of funds owed to customers who left SSE after day 49 of the transitional dead tariff and before the initiation of the migration process on 28 June 2017, SSE will make a corresponding voluntary redress contribution of £35,000 via the Energy Saving Trust.
In addition SEE set up a dedicated support service for customers querying the compensation value. They established a support fund, which customer service advisers could access on a case by case basis should the circumstance of particular customer require further compensation. Around 60 customers have received additional support totalling £4,300.
SSE has now compensated all affected customers. It has co-operated with Ofgem throughout the compliance process. Due to these actions, we have decided to close the compliance case without taking further action.
This case highlights important lessons for suppliers when dealing with termination of the white label partnerships:
- Suppliers must have regard to the rights of consumers with respect to switching supplier, particularly when an intermediary such as a white label is involved.
- Suppliers must have in place contingency plans for their customers should, for whatever reason, co-operation with the white label partner become difficult or impossible.
- This includes robust arrangements to ensure timely customer migration in accordance with the requirements of the license conditions.
- Suppliers must ensure that customers are notified appropriately and compensated in full for any detriment resulting from termination of white label relationships.
It is not Ofgem’s role to mediate disputes between suppliers or suppliers and third parties. Rather we expect licenced parties to respect the licence and to work together to avoid the risk of consumer confusion and detriment.
Director - Conduct and Enforcement
Signed on behalf of the Authority and authorised for that purpose
28 June 2018