Decision of the Gas and Electricity Markets Authority to close its compliance engagement with Green Star Energy
Decision
Publication date
Company
Industry sector
Supply and Retail Market
Ofgem recently concluded its compliance engagement with Green Star Energy, the trading name of Hudson Energy Supply UK Ltd. for domestic supply, on its compliance with Standard Licence Condition 0, on Standards of Conduct and Standard Licence Condition 7.7, on information for customers about deemed contracts. Following this engagement, Green Star Energy has (1) taken a number of actions aimed at bringing it into compliance with these licence conditions, (2) committed to financially compensate customers (paying any unclaimed compensation to the Energy Industry Voluntary Redress Scheme), and (3) committed to pay a voluntary contribution to the Energy Industry Voluntary Redress Scheme.
Under Standard Licence Condition 0 suppliers must ensure they treat customers fairly. Suppliers must ensure that they have customer service arrangements in place which make it easy for a domestic customer to contact them and to act promptly and courteously to put things right when they make a mistake. Standard Licence Condition 7.7 requires suppliers to take all reasonable steps to provide customers with the principal terms of their deemed contract and notice that contracts with different terms may be available and of information about how such contracts may be obtained, commonly referred to as ‘Welcome Packs’.
In December 2018, Ofgem became aware that Green Star Energy was not updating its change of tenancy records in a timely manner and was not sending Welcome Packs to new tenants as required by its licence. The affected customers were all within the private rental market. This failure had the effect that tenants may not have been aware of who was supplying their energy or that they were on a potentially more expensive deemed tariff, that contracts with different terms may be available, and importantly, it prevented tenants from switching to a better deal. If those customers tried to contact Green Star Energy, since they would not have been on the supplier’s records, they may have been unable to clear data protection checks and consequently have been unable to progress their enquiry.
We engaged with Green Star Energy, confirmed the issues and that they were extant. Green Star Energy were aware of the issues and had neither addressed them nor reported them to Ofgem. This is the third compliance engagement we have opened with Green Star Energy in the past year.
Following our engagement, Green Star Energy has reviewed its systems and identified and addressed the deficiencies that led to the issues, including the replacement of senior staff responsible.
Green Star Energy identified 1,829 customers who had not received Welcome Packs and were on potentially more expensive deemed contracts. The supplier is in the process of paying compensation of £60 to each affected customer in recognition of the fact that these customers did not receive Welcome Packs and, if these customers had tried to contact Green Star Energy, they would not have been able to progress their enquiry due to not being on the supplier’s records. Green Star Energy has also committed to an additional voluntary contribution of £240,260 to the Energy Industry Voluntary Redress Scheme in recognition of its failings. This gives a grand total redress of £350,000.
Key lessons learned
- It is very important that customers always receive timely information that promotes their positive engagement, so they can make informed choices about their energy supply. When suppliers start providing energy to new tenants in a property, they must:
- promptly set up customer accounts and ensure that their records are up to date with the correct customer details;
- make it easy for customers to contact them; and
- provide information for customers about deemed contracts.
- In determining the appropriate action against supplier non-compliance, we take into account whether suppliers self-report, the extent of their engagement with us through the compliance process and their past performance and behaviours