- Publication date
- 12th June 2018
- Information types
- Policy areas
- Automatic compensation if switch goes wrong to boost consumer protection and confidence in switching
- Suppliers will be required to pay at least £30 in compensation for each switching problem under Ofgem plans
- Compensation intended to cover erroneous and delayed switches as well as late final bills and credit balance refunds
Suppliers will be required to automatically compensate customers if their switch goes wrong, under Ofgem proposals announced today.
Customers would receive at least £30 in compensation for each switching problem they experience.
Problems covered include being mistakenly switched to another supplier, known as an “erroneous transfer”, or switches taking longer than 21 days to complete.
Automatic payouts could also be triggered by suppliers which are late in sending final bills or refunding credit balances to customers who are leaving.
The new rules would give peace of mind to consumers that they will be compensated if something goes wrong when they switch.
They should also serve as a wake up call for suppliers to reduce the number of problems and boost consumers’ confidence in switching.
According to Ofgem’s research, many people are put off from switching because of worries something may go wrong, especially if they have experienced a problem before.
While the vast majority of switches go smoothly, more problems are occurring as more people switch to get a better deal.
Last year, 5.1 million electricity consumers and 4.1 million gas consumers in total switched supplier, the highest number for almost a decade.
In February, Ofgem gave the green light to a programme to overhaul industry systems by 2020 to allow people to switch by the next working day and reduce the number of switches which go wrong.
Ofgem’s proposals for automatic compensation, which should be in place by the end of this year, will give consumers extra protection before this programme is completed.
Ofgem intends to introduce a price cap for all consumers on poor value default deals by the end of the year to protect them from overpaying for their energy. These consumers will be able to save even more money by switching.
Rob Salter-Church, interim executive director of consumers and markets at Ofgem, said: “While the vast majority of switches go smoothly, too many problems are still occurring. These can cause inconvenience, and in some cases, real worry and stress for those affected.
“Today’s proposals for automatic compensation will strengthen protection for consumers who switch, and should serve as an incentive for suppliers to get switches right first time.”
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Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
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