Ofgem completes review of how suppliers support customers in payment difficulty
Decision
Publication date
Industry sector
Supply and Retail Market
Related Links
- Market Compliance Assessments - Update on next steps and further annual assessments in 2022
- Ofgem seeks improvements from 12 suppliers in relation to customer direct debit setting
- Consumer First Panel - Affordability and Supplier Support
- Good practice for supporting customers in payment difficulty
- Regulatory expectations on supporting customers in payment difficulty
- Market Compliance Review into customers struggling with bills
Ofgem has undertaken a Market Compliance Review to assess how suppliers support households who are having difficulty paying their energy bill. Government is providing support to households due to the unprecedented increases in energy prices and the cost living but there is serious and widespread concern that many more will struggle with their energy bills. Some suppliers are already putting in place a package of support to help their customers over the coming Winter but they also need to have policies and processes to ensure they meet their obligations under their Supply Licence. This includes for prepayment meter customers who are at risk of self-disconnecting if they cannot afford to top up their meter. We have reviewed policies and procedures provided by suppliers and where we have identified weaknesses, we are requiring suppliers to take action to address these.
Our analysis identified several areas for improvement. This includes:
- proactively identifying customers in payment difficulty including those on prepayment who may have self-disconnected or are in danger of doing so, so that support can be offered.
- ensuring systems and processes are in place to efficiently and effectively identify, support and serve customers in payment difficulty.
- ensuring payment rates are set according to customers’ circumstances and ability to pay, ensure that this is regularly reviewed, and that debt is not aggressively pursued by the suppliers or third party it uses.
- repaying debt, for example through a prepayment meter, where in some circumstances these approaches are not appropriate for customers.
- ensuring the appropriate provision of emergency credit and Additional Support Credit to prepayment customers.
- improve signposting to any third party specialists help to customers.
Our Assessment approach
To help inform Ofgem as to whether suppliers’ processes provide good customer outcomes, Ofgem also considered the data which is required to be reported to us on a regular basis by suppliers including information on the number of customers in energy debt, the level of debt and prepayment disconnections.
After our initial assessment, we engaged with suppliers on our concerns and requested further information to confirm and clarify our findings to finalise our assessment. To drive improvements, we have asked suppliers to take action to address the weaknesses we identified. Based on our assessment and feedback we have already provided, suppliers are implementing improvement plans.
Our assessment divided suppliers into four groups:
- No significant issues
- Minor weaknesses
- Moderate weaknesses
- Severe weaknesses
Assessment findings
The only supplier in the first group is British Gas. Our review of information provided to us identified that British Gas generally had processes and governance in place designed to meet their obligations to identify and support customers in payment difficulty, although we requested some clarifications to their responses.
The second group consisted of Ecotricity, EDF, EON, Octopus, OVO, Shell, SO Energy and Utility Warehouse. For this group of suppliers, we identified some weaknesses or gaps in their processes that they need to make improvements to. Examples include lack of signposting to third party specialists in communications, gaps in training and policy documents, issues providing accurate data to Ofgem, gaps in assurance and risk management processes that could potentially impact suppliers ability to identify risks and develop improvements and potentially not taking account of all relevant factors when setting customer repayment plans. We have started compliance engagement with these suppliers to secure improvements.
Suppliers in the third group are Bulb, E Gas & Electricity, Good Energy, Green Energy UK and Outfox the Market. With this group, we noted that while processes were generally in place, in some cases they were not adequately documented and insufficient controls and governance were in place to ensure good consumer outcomes. Other examples include weaknesses in processes that could lead to customers being denied support where it was required and not being offered flexible repayment arrangements when they are in payment difficulty. We have also started compliance engagement with these suppliers to drive improvements to these processes.
We identified three suppliers where there were severe weaknesses: Tru Energy, Utilita and Scottish Power. In each case, we identified that the supplier did not have a consistent and structured approach to managing customers in payment difficulty or a risk that policies designed to support customers were not being implemented, and that they were not properly identifying or fully supporting prepayment customers. We believe this puts consumers at a serious risk of poor and potentially serious outcomes including self-disconnecting, and there is a clear need for rapid and significant improvement.
Our expectations on suppliers
We are engaging with suppliers across the market, to drive improvements in processes to ensure customers are properly supported, and not at risk of disconnection.
Where we have serious concerns, we are considering what further action may be necessary. In the cases of Utilita and Scottish Power, on the basis of our findings and other evidence, we have issued provisional orders requiring them to take specific urgent action to address our concerns.
Alongside this note we have published a letter outlining our expectations on suppliers including the key support they should have in place to help household customers struggling to pay their bills this winter. This includes good practices that should be adopted to ensure customers get the best possible support.