£8m paid out over energy compensation failures

Three UK energy suppliers have paid out a total of £8m, following compensation payment failures.

E.On Next, Good Energy and Octopus Energy either delayed or failed to make statutory compensation payments owed to energy customers, which are due if a supplier does not provide a final bill within six weeks when a customer switches to another provider. 

Coventry-headquartered E.On Next, paid a total of £5.5m to almost 95,000 customers, whilst Octopus Energy paid £750,000 to 19,000 customers and nearly 350 Good Energy customers received a combined total of £18,000.  

Suppliers paid an additional compensation of £1.7m to customers or the Energy Industry Voluntary Redress Scheme (EIVRS), which supports vulnerable consumers.  

This included £1.3m from E.On Next to the EIVRS in recognition of its system failings and compensation delays. This money will be spent on targeted local energy saving projects.

This is the first time energy regulator Ofgem has taken compliance action in relation to final billing performance standards, since it introduced additional ‘Guaranteed Standards of Performance’ to reduce delays in final billing in May 2020.

Neil Kenward, director for strategy at Ofgem, said: “Ofgem introduced these standards to make sure customers get the service they deserve when switching energy supplier. 

“Our rules mean that where energy companies drag their heels, customers are automatically compensated. We won’t hesitate to hold energy companies to account, as we have done today.  

“As the energy market starts to recover, we’ll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.” 

Ofgem established that the three suppliers either missed or unduly delayed GSOP compensation payments worth £6,305,925. More than 100,000 customers were affected, and some waited more than a year to receive compensation. 

These Guaranteed Standards of Performance regulations (GSOP) entitle customers to a one-off compensation payment of £30 if a final bill is not produced within six weeks.  

If this compensation is not provided within a further 10 working days, a customer is due a GSOP compensation payment of another £30. 

Problems occurred due to suppliers’ billing processes and systems not set up to deliver the GSOP payments in line with the timeframes set out in the regulations.   

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