Ofgem is looking at introducing automatic compensation for energy consumers who are hit by late final bills, in a major victory for MSE.
We have pushed the regulator to back a six week deadline for suppliers to issue a closing bill after switching and under the proposals announced today (Tuesday 12 June), customers would receive £30 in compensation if their supplier fails to deliver within that period.
The propsals also set out automatic compensation for a range of other switching issues, including being mistakenly switched to another supplier – known as an ‘erroneous transfer’ – and delayed switches and credit refunds, also areas where MSE has pressed Ofgem in the past.
Depending on the problem someone encounters, compensation would range between £30 and £60 – and consumers would be compensated for each one they experience.
Ofgem expects the compensation scheme to be in place by the end of the year.
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Martin: ”The idea that you shouldn’t get a final bill very late after six weeks is absolutely spot on”
On the proposals to compensate when a supplier fails to send a final bill within six weeks, Martin Lewis, founder of MoneySavingExpert.com and Cheap Energy Club, said: “Again, it seems like Ofgem has been listening.
“The idea that you shouldn’t get a final bill very late after six weeks is absolutely spot on. For too long, people feel that they’ve left an energy provider and moved on elsewhere, but then for up to a year later can find themselves hit by bills of £100s for outstanding energy because the company has not got its act together.
“That isn’t good enough. It causes nightmarish budget problems and pushes some over the limit. Quite simply, after six weeks an energy company should give you your final bill, and at that point if it later decides it has got it wrong and you owe more money, it should not have a right get it off you.
“They need to be more efficient, and if they’re not, it’s got to cost them.”
In addtion to late bills, MSE has also previously pushed for greater protections for consumers affected by delayed switches, erroneous switches and delays to credit refunds.
What are Ofgem’s propsals?
The Ofgem prosposals outlined today are a set of new ‘Guaranteed Standards’ for a range of switching problems commonly encountered by consumers.
Where a supplier fails to meet the new standards, they would be required to pay automatic compensation to the affected customer. In some cases, both the gaining supplier (the one the consumer is switching too) and the losing supplier (the one the consumer is switching away from) will be required to pay compensation.
This means a customer could recieve as much as £60 in compensation – should both the losing and gaining supplier be required to pay.
In other cases, it is just the losing supplier or the ‘contacted supplier’ (the one the consumer initially contacts to report a problem) that pays compensation.
Though currently only proposals, Ofgem says it sees this as the best way to ‘achieve our stated objectives of improving consumers experience of switching and reducing the detriment experienced by consumers when switches go wrong’.
It is consulting on these proposals, with an aim to publish new regulations in autumn 2018, before they take affect from 31 December 2018
What does Ofgem’s say?
Rob Salter-Church, interim executive director of consumers and markets at Ofgem, said: “While the vast majority of switches go smoothly, too many problems are still occurring. These can cause inconvenience, and in some cases, real worry and stress for those affected.
“Todays proposals for automatic compensation will strengthen protection for consumers who switch, and should serve as an incentive for suppliers to get switches right first time.”
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