Ofgem calls for ‘culture change’ from energy firms on customer service

Ofgem has warned energy firms that it expects a “culture change” in their customer service to improve public trust in the sector.

The regulator warned that “no options are off the table” and the sector needed “clear penalties” as it announced proposals including a revision of back billing rules on how far back a customer can be charged in cases of supplier error, how billing accuracy can be improved, and improvements to compensation rules.

Ofgem said it will also be exploring new powers for it to take “firm action” against failing suppliers.

It said the redesigned regulations would “help create a culture shift in attitudes”, adding that it did not think the market would deliver on improvements to customer service without its intervention.

Customer satisfaction levels fell to their lowest levels during the energy crisis and, despite recent improvement, the industry still lags behind most other sectors – and significantly behind leading sectors which currently have the best rated customer service, such as banking.

Ofgem’s director general of markets, Tim Jarvis, said: “Consumer trust depends on good customer service, so it is critical that energy suppliers are reliable, accurate, accessible and fair.

“We are looking at the big picture here, and it’s not just making small changes we want to see today. It’s about building a service structure capable of helping customers navigate a more complex future market, as new technology like electric vehicles and heat pumps rapidly changes the way consumers interact with their supplier.

“Every energy consumer should have confidence that the system works in their interests and when things go wrong, they will be fixed quickly and effectively. The steps we are setting out today will bring us closer to that goal.”

Dhara Vyas, deputy chief executive at Energy UK – which represents suppliers, said: “Millions of households, unfortunately, continue to face significant financial pressures, struggling with the rising cost of living and falling behind on their bills.

“Energy suppliers are doing all they can to support their customers, during this time of increased need, managing growing volumes of increasingly complex customer enquiries.

“Companies have invested heavily in new staff, training and systems to help customers get the advice and support they need. Suppliers have also worked with Ofgem to implement new customer standards, including ease of contact – as well as stepping up to provide tens of millions of pounds in discretionary financial support.”

Which? director of policy and advocacy Rocio Concha said: “Our research has found the energy sector is one of the worst performing sectors for customer service so it’s absolutely right that Ofgem is pushing firms to improve their customer service.

“It is never OK for firms to provide sub-standard customer service, but in an essential sector like energy, it is completely unacceptable.

“Any firms falling short must give consumers the customer service they deserve and clearly communicate the steps they are taking to improve.”

A Department for Energy Security and Net Zero spokesman said: “We inherited a retail market that is simply not working for many consumers – from the forced installation of some pre-payment meters, to some suppliers taking far too long to refund excess credit and correct billing errors.

“It is clear we need to reset Ofgem so that it can act as a true consumer champion.

“We will look at these proposals closely, ahead of setting out our own plans to strengthen the regulator later this year.”