Open letter: Guidance on the allocation of voluntary redress payments
Guidance
Publication date
This open letter provides information on the current process and the set of principles involved in allocating voluntary redress payments to suitable charities, trusts and organisations in the context of enforcement investigations conducted under our Gas and Electricity Act powers.
Companies may volunteer to pay a sum of money to appropriate charities, trusts or organisations in lieu of, or in addition to a financial penalty for breaches of licence conditions. Companies may also volunteer these payments to remedy any harm to consumers, in addition to compensation to those directly affected, where Ofgem has not conducted a formal investigation.
Following a consultation in the summer of 2016, we decided to appoint an independent expert to allocate voluntary redress funds to charitable organisations. We consider that this will enhance the transparency of the use of voluntary funds, and ensure that the funds maximise the benefits to consumers.
On 24 August 2017 we announced the appointment of the Energy Saving Trust (EST) as the independent Service Provider to manage and allocate voluntary redress funds for the next 2 years. The contract may be extended by up to 4 years. This process will only commence once we have arranged for at least £500,000 to be deposited in the Redress Fund Account from energy companies. Until this point, we will continue to follow the current approach as set out on this page.
In January 2018, the level of funding required to activate the EST’s contract was lowered to £250,000 in order for the EST to commence the allocation of redress funding. Further information on the scheme can be found on the EST’s website.
The guidance provided in the document below is replaced by the Authority’s guidance to the EST.