Ofgem completes review of how suppliers support customers in vulnerable situations
- Electricity Supply Licence
- Gas Supplier Licence
Ofgem has undertaken a Market Compliance Review to assess how suppliers support customers in vulnerable situations. While suppliers take steps to support customers, they need to have clear governance, policies, procedures and training in place to ensure they meet their obligations under their Supply Licence. This includes:
- Proactively identifying and recording domestic customers who, due to their Personal Characteristics or otherwise are in a vulnerable situation, and offer services to support them, within a Priority Services Register (PSR).
- Providing free gas safety checks to eligible customers.
- Ensuring the functionality of the domestic customer’s prepayment meters, including smart prepayment meters, are used only when safe and reasonably practicable in all the circumstances of the case.
- Providing appropriate support to customers in vulnerable situations using prepayment meters, who have self-disconnected/ self-rationed, or are at risk of self-disconnecting/self-rationing.
- Ensuring communications with the domestic customer is in an accessible format; so far as is reasonably practicable, appropriate to their needs on the basis of their personal characteristics and/or vulnerable situation.
We have reviewed and rated suppliers on information they provided to us on how they manage customers in vulnerable situations. Where we have identified weaknesses in the governance, policies and procedures, or where there was not adequate information provided in response to our request to assure us, we have required suppliers to take action to address this. Many suppliers have already responded positively based on the feedback from our review. Our analysis identified a number of areas for improvement. These include:
- Having clearer policies and procedures to identify customers in a vulnerable situation.
- Ensuring customer-facing staff are trained appropriately to identify and support customers in vulnerable situations.
- Having quality assurance controls to ensure third-party representatives act in line with required standards.
- Demonstrating how risks associated with serving customers in vulnerable situations are identified, recorded, assessed and mitigated.
- Utilising comprehensive reporting and clearly defined responsibility areas for decision-making relating to customers in vulnerable situations.
- Demonstrating that using pre-payment meters, including smart meters switched to this mode, is appropriate for customers and that self-disconnected/self-rationing customers are supported.
- Having more robust audit procedures to ensure high standards are achieved and maintained in these areas.
Our assessment approach
To help inform Ofgem on whether suppliers’ operations provide good customer outcomes, we considered material provided to us in response to our request for information dated 4 July 2022. This includes market monitoring data, which is required to be reported to us on a regular basis by suppliers; including priority services registration and customers who are self-disconnecting/self-rationing.
While it is clear many suppliers take customer vulnerability seriously, including some launching worthwhile initiatives to assist customers in vulnerable situations, there are still improvements needed. To drive these improvements, we have started compliance engagement with all suppliers and asked them to take action to address the weaknesses we identified. Based on our assessment and feedback we have already provided to them suppliers are implementing improvement plans.
All suppliers had issues to address. Our assessment divided suppliers into three groups:
- Minor weaknesses
- Moderate weaknesses
- Severe weaknesses
The first group consisted of British Gas, Bulb, EDF, E.ON, Ovo, Scottish Power and Utility Warehouse. In the main these suppliers had most of the required processes, procedures and training in place but there were some areas for improvement identified that could lead to poor customer outcomes if not addressed. Examples include demonstrating clear oversight of how customers in vulnerable situations are identified including assurance of third parties acting on behalf of suppliers (meaning, where suppliers use third parties to provide services on their behalf, they monitor them appropriately to ensure appropriate vulnerable customer management).
Suppliers in the second group, who have been identified with moderate weaknesses, are E (Gas & Electricity), Ecotricity, Green Energy UK, Octopus and Shell. With this group, we noted that while processes were generally in place, in some cases these were not adequately documented, with insufficient controls and governance in place to ensure good consumer outcomes. Other examples include weaknesses in processes that could lead to customers in vulnerable situations self-disconnecting or being disconnected.
In the third group, we identified five suppliers where we had severe concerns: Good Energy, Outfox, SO Energy, TruEnergy, Utilita. In each case, we identified that suppliers did not demonstrate they have a consistent and structured approach to identifying and supporting customers in vulnerable situations or a risk that policies designed to support customers were not being implemented.
We believe this puts consumers at a serious risk of poor and potentially serious outcomes and there is a clear need for rapid and significant improvement.
Our expectations on suppliers
Suppliers need to deliver on their improvement plans to demonstrate that their fully support customers in vulnerable situations in line with their licence obligations.
We have written to suppliers on remote switching of smart meters to prepayment mode with our expectation that they review their obligations and processes on smart prepayment meter practices as a matter of urgency and to ensure that customer service representatives are briefed on the severity of the impact that poor practices can have on customers. We have also published a letter with our expectations on suppliers including the key supports they should have in place to help customers.
Where we have serious ongoing concerns with suppliers, we will consider what further action may be necessary in line with our Enforcement Guidelines.