Ofgem Announces New Customer Service Rules For Businesses

Energy regulator Ofgem has today (Wednesday 26 July) proposed a series of reforms to further improve standards of customer service for both businesses and households.

Following extensive engagement with energy suppliers, businesses, consumers and other organisations, Ofgem is today announcing the publication of:

A Non-Domestic Market Review findings and consultation:
non-domestic refers to anything that is not a household. Many businesses throughout the country are struggling with energy market issues. The review summarises the challenges they face, and proposes a number of actions for the sector, Ofgem and Government to address.

A Consumer Standards Statutory Consultation:
There has been a decline in overall consumer satisfaction with customer service by domestic energy suppliers since 2018. Considerable work is already underway to address this. Ofgem is proposing new rules to ensure that all domestic customers, regardless of which supplier they are with, can contact their supplier and get support if they are struggling to pay.

Minimum Capital Requirements for supplier finances:
Ofgem wants all energy suppliers to be financially secure to ensure consumers benefit from a stable energy market. To that end, Ofgem is today announcing a decision on the level of capital that suppliers are required to hold to ensure they are more resilient to severe but plausible market shocks. Ofgem is also proceeding with proposals to have the power to direct suppliers to ringfence a portion of their customer credit balances when it is deemed to be in the consumer interest.

Ofgem’s proposals would establish expectations to ensure all consumers receive a consistent and acceptable level of service regardless of the company they are with.

The regulator is taking these steps to drive up standards before this winter to make sure customers – particularly those in a vulnerable situation – are properly served, and to strengthen protections for business energy customers.

For the non-domestic market, some of the immediate changes Ofgem has taken to help the non-domestic energy market include working with industry to adapt the Retail Energy Code to avoid excessive delays and unreasonable requests for documentation during tenancy changes and urging suppliers to be more flexible with businesses who signed up for peak fixed rate prices.

But there are issues flagged in the review that require regulatory change, so Ofgem is announcing it will consult on:
Introducing better complaint handling between suppliers and businesses – the review heard businesses did not always get the right level of customer service.
Extending micro business protections to all businesses so energy bills spell out what is being paid to energy brokers plus allowing businesses to resolve disputes through a redress scheme.

Creating better guidance over ‘deemed contract rates’ between customers who have not yet agreed contractual terms with a supplier to avoid problems like overcharging.

As Ofgem’s powers in non-domestic retail market are more limited than in the domestic sector, it is asking government to consider further protections in areas it doesn’t have the power to regulate, like energy brokers. Ofgem is also asking for businesses to be given access to the energy ombudsman. It also calls for further consideration for vulnerable domestic consumers on non-domestic contracts – like people who live in care homes, social housing and in mobile home parks – who are at risk of missing out on important protections.

Neil Lawrence, Director at Ofgem, said:
“Suppliers are short-changing too many of their customers, who deserve better.
“Customers need more support when they are struggling and should be able to contact their supplier without frustration or undue delay when they need help.

“The plans we are announcing put the welfare of business and domestic consumers first and set out a comprehensive package to tackle poor behaviour by energy suppliers.

“Good customer service is important for all consumers, but it can make a critical difference to welfare and the safety of the most vulnerable.

“While we have seen good practice from some suppliers, we expect every company to raise the bar to provide a consistent service that customers can rely on – and this mission should be driven from the top.

“We believe these recommendations can make a positive difference to consumers and we aim to have changes in place before the cold winter months return.”
Today’s announcement follows a letter signed by Care England to Ofgem, published earlier this week.

Professor Martin Green, Chief Executive of Care England, said:
“Over the last 16 months, Government support has not reprimanded the inflated energy costs, which remain unsustainably higher than in previous years, and often worsened by poor broker behaviour. The care sector has been disproportionally affected by the rising energy costs, and the announcement today is a welcome step forward. Care England has been exercised in its calls for business protection measures and is pleased that the needs of the care sector have been recognised, only this week seeing a broker charge £68,126 for an energy renewal which our own professional energy broker reduced to £12,606. Consulting on extending micro business protections to all businesses is therefore essential to draw a halt to rogue broker behaviour and we welcome the increased protections Ofgem has called on government to consider, including the power to regulate brokers and support vulnerable consumers on non-domestic contracts in care homes.”

Earlier this year, to combat unscrupulous broker behaviour Care England launched the second round of its energy tender which remains open to all care providers, to secure the lowest possible energy prices for gas and electricity renewals between 2023 and 2026.


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