Ofgem’s deep dive delivers £5m boost for consumers
Press release
Domestic energy supplier E.ON Next Energy Limited is to pay £5 million in compensation for poor standards of customer service, uncovered by an Ofgem review of the market.
Throughout 2022, energy regulator Ofgem conducted a series of Market Compliance Reviews (MCRs), examining energy suppliers’ performance on key areas across the sector in a bid to drive up standards.
One of these ‘deep dive’ reviews was focussed on customer service and complaints, and found severe weaknesses at E.ON Next, notably in relation to excessive call waiting times and high abandoned call rates.
The review found that during the period October 2022 to December 2022, E.ON Next’s customer contact provision struggled to cope with demand – meaning that many customers were unable to speak to E.ON Next or were forced to wait on hold for 18 minutes on average. The data also showed an unacceptable call drop-off rate with 50 percent of customer calls failing to successfully contact the supplier.
Over 500,000 customers were potentially affected.
Ofgem issued an order requiring immediate improvements to the call response rate, E.ON Next had already started addressing the issues and worked constructively with the regulator to quickly deliver improvements. As a result, call waiting times reduced to an average of less than five minutes and the dropped call rate fell below 10 percent.
E.ON Next has agreed to pay £5m in redress as follows:
- E.ON Next will automatically compensate those customers most directly affected. Customers will receive £8 each, totalling £4 million. Customers do not need to do anything to receive this payment – it will be paid to them automatically.
- An additional £1 million will be paid into Ofgem’s Voluntary Redress Fund, which supports energy consumers in vulnerable situations, and other innovation and carbon emission reducing investments.
Cathryn Scott, Director for Enforcement and Emerging Issues at Ofgem, said: “This shows Ofgem’s determination to stand up for the rights of consumers and drive up standards.
“The very least that a customer should expect of their supplier is for them to pick up the phone to them in a timely way. The levels of service that we discovered at E.ON Next during the period of review were unacceptable.
“As the energy regulator, our purpose is to protect energy consumers and this action serves as a reminder to all suppliers that they must ensure that their customers are able to contact them quickly and easily when they need to. This is particularly important during this time of volatile energy prices when many households are struggling with their bills.”
Ofgem has continued to monitor E.ON Next to ensure the necessary changes to their processes required by the Provisional Order have been implemented and are sustained.
More details about the successful progress made as a result of Ofgem’s Market Compliance Reviews can be found here.
Notes to editors
On 2 February 2023, Ofgem issued E.ON Next with a Provisional Order as it appeared that E.ON Next was contravening or was likely to contravene Standard Licence Conditions (“SLCs”) 0.3(c)(i) and (iii) of its Gas and Electricity Supply Licences. This related to poor customer service provision in the period of October 2022 to December 2022. These failings were uncovered following Ofgem’s Market Compliance Review (MCR) assessing how easily customers can contact their suppliers.
Having reviewed the data submitted by E.ON Next as part of the MCR, Ofgem was concerned by the difficulty faced by customers in trying to contact E.ON Next, many of whom faced very long waiting times or needed to contact multiple times in order to get through.
Findings of the MCR identified weaknesses across all suppliers, including:
- Weak policies and pathways for customer service journey, including incomplete communications to customers in relation to complaints
- Inconsistent scripts for staff handling complex calls
- Customers left waiting for hours on the phone on several occasions
- Phone calls simply not picked up and slow responses on written customer contacts
- Significant numbers of customers giving up and hanging up calls as not answered
- High rates of customer complaints upheld by the Energy Ombudsman
- Incomplete management information being used to monitor performance, and
- Weaknesses in customer service agents’ training and/or quality control mechanisms.
As a result of the review, Ofgem required all suppliers to make improvements, having found moderate weaknesses at 11 companies (British Gas, E Gas, & Electricity, EDF, Good Energy, Outfox the Market, OVO, Scottish Power, SO Energy, Utilita, Utility Warehouse and Tru Energy).
Minor weakness were found at five suppliers (Bulb, Ecotricity, Green Energy, Shell and Octopus). No suppliers has ‘no weaknesses’ at all.
These deep dive reviews undertaken are part of Ofgem’s strategy to drive up performance by energy suppliers and are yielding progress in terms of the improvements already made as a result.
Ofgem’s findings on this Market Compliance Review tallied with what customers themselves are reporting. A recent Energy Satisfaction survey of 3,000 domestic energy consumers shows that in November-December 2022, overall customer satisfaction with energy suppliers was amongst the worst ever seen since tracking began in 2018.
This survey, funded by Citizens’ Advice and Ofgem, and carried out by Quadrangle Research, found that a fifth of consumers who had fallen behind on paying their bills felt they did not receive appropriate support for their needs.
Ofgem is also examining where it can introduce stronger, more prescriptive minimum consumer standards - working with government, consumer groups and suppliers to make sure customers are protected.
The Energy Redress Fund is run on behalf of Ofgem by the Energy Saving Trust.