Ofgem: Automatic Compensation For Failed Switches

Ofgem has announced that electricity and gas customers will automatically receive £30 compensation if their switch to a different energy provider doesn’t go smoothly.

The watchdog says that customers shopping around should get ‘peace of mind’ due to the new regulation. Last year, there were over 6 million customers switching from one energy provider to another.

The new scheme will begin this coming May, with companies having 15 days to make sure a customer’s switch is completed, otherwise they will have to pay the £30 compensation.

Failure to supply a final bill within six weeks, or a mistaken switch, may also qualify as grounds to pay compensation.

Ofgem introduced an initial set of compensation payments last year. These targeted suppliers that failed to meet the standards required for refunding credit balances or correcting mistaken switches.

Since the introduction of these stipulations, over £700,000 in compensation has been paid out by suppliers. Late credit balance refunds account for 73% of the payouts, with mistaken switches making up the remaining 23%.

CEO of Citizens Advice, Dame Gillian Guy, said: "Households can still save hundreds of pounds by switching and shouldn't be put through the hassle and stress of having to claim compensation when energy suppliers make mistakes”.

Executive director for consumers and markets at Ofgem, Mary Starks, said: “More customers are switching than ever, with a record 6.4 million changing supplier in 2019. But we also know that a minority can still experience problems when they switch.

“As part of our commitment to protecting consumers and enabling competition, we are introducing these new standards to give customers further peace of mind, and to challenge suppliers to get it right first time”.

Kwasi Kwarteng, the energy minister, said: “We’ve made it easier than ever for consumers to shop around and record numbers are now switching suppliers to save on their bills.

“These tough new standards will ensure switching is as smooth as possible and consumers are always protected”.

David Pilling of the Energy Ombudsman described the move as a ‘welcome intervention’. The Energy Ombudsman independently referees disputes between providers and customers.

"Switching is now second only to billing as a source of complaints that we handle, so it's clear that for too many people the process of changing supplier doesn't go as smoothly as it should," Pilling said.