Energy consumers in the UK will now receive automatic compensation if they experience problems when switching supplier.
Under new rules announced by the industry regulator Ofgem, all gas and electricity customers in the country will be entitled to compensation if their energy supplier is switched without their permission or if their credit balance isn’t refunded 10 days after receiving a final bill. The compensation will be automatic, and customers should receive at least £30 for each issue.
If a supplier doesn’t acknowledge a mistaken switch after 20 days of a customer raising the issue, they must pay £30 to the customer. If both the old and new suppliers don’t agree that a mistaken switch happened within 20 days of a customer raising the issue, both suppliers must pay out another £30. They must also pay a further £30 if they don’t switch the customer back within 21 days, and another £30 if they fail to refund any customer’s credit balance within 10 days of sending a final bill.
Suppliers will also have to pay a further £30 in compensation for each issue if the customer isn’t automatically compensated within 10 days. So, in theory, if everything went wrong a customer could be entitled to up to £300 for the energy suppliers’ failures.
In 2017, there were around 90,000 accidental energy switches recorded in the UK, according to Ofgem. There were also 810,000 switches that took longer than the maximum time allowed – 21 days. However, plans to make energy suppliers compensate their customers when a switch takes too long have been delayed until later this year. Ofgem has predicted that, once this rule also comes into force, customer will benefit from a total of £73.1 million in payouts every year.
“When a switch goes wrong, it can cause inconvenience, and in some cases, real worry and stress for those affected,” said Rob Salter-Church, director of retail systems transformation at Ofgem. “Automatic compensation payments from 1 May, and additional payments this year, should serve as an incentive for suppliers to raise their game and get switches right first time.
“These new requirements, together with the introduction of the price cap, and tightening rules on new suppliers entering the market, demonstrate our commitment to protecting consumers and ensuring they get a better deal.”
Natalie Hitchins, head of home products and services at Which?, said: “Switching is the ultimate way for consumers to avoid rip-off energy tariffs, yet the regulator has estimated energy customers would have been owed more than £70 million in just one year for switches gone wrong had automatic compensation been in place, and with switching on the rise this figure could be even higher. The regulator now needs to enforce its automatic compensation standards so that energy companies get it right first time and consumers are not put off switching – given they could potentially save more than £300 a year.”