From this week rigorous new standards of conduct come into force that will ensure energy suppliers are treating consumers fairly.
The introduction of these new enforceable rules is the first stage of Ofgem’s reforms to make the energy market simpler, clearer and fairer.
The standards of conduct cover all interactions household suppliers have with consumers, from when they are marketing energy deals to them, to making amends when customers make a complaint about any aspect of their energy supply.
Suppliers will have to carry out all these actions in an honest, transparent and professional manner. They must make sure that any information given to consumers is clear, easy to understand and written in jargon-free language.
Suppliers must take into account customers’ needs in all their dealings with them. And they will have to publish statements each year clearly showing what actions they are taking to treat consumers fairly.
Andrew Wright, Ofgem’s Chief Executive, said: “Suppliers have already taken some steps to make the energy market simpler for customers and we welcome that, but our package of reforms means they must go further. The standards of conduct we have introduced require suppliers to go through a culture change in the way they treat consumers.
“They have to make sure they are embedding simplicity, clarity and fairness into all their dealings with consumers to tackle the lack of trust that has blighted the market. The standards of conduct will also enhance consumer protection as they are backed by Ofgem’s power to levy fines.” *
The onus will be on suppliers to embed fair treatment of consumers in every level of their organisation. Any brokers or third party intermediaries that represent suppliers will also be bound by the standards of conduct.
The standards of conduct are the first part of Ofgem’s reforms to come into place under the biggest shake up of the retail energy market since competition was introduced. Ofgem has also today published its final decision on implementing the rest of its reforms. This means that provided there are no appeals against the decision, the main reforms to tariffs, including the restriction on suppliers offering no more than four core tariffs per fuel, will be in place before the end of the year.
Following the main reforms to tariffs the rules to give customers clearer information, including the requirement that suppliers put details of their cheapest offers, which are personalised for individual consumers, on all bills and annual statements will come into force at the end of March 2014. (See notes to editors for further information)
-ENDS-
1. Ofgem is today issuing directions to change energy suppliers’ licences so that the rest of the retail market reforms, in addition to the standards of conduct can be implemented. Ofgem is obliged to allow a 56 calendar day period before the reforms take effect. Licence holders (including suppliers), trade bodies representing licence holders and Consumer Futures now have 20 working days to decide whether they should appeal against the reforms to the Competition Commission. If an appeal is not lodged, the rest of the package can start to take effect from 22 October 2013. Given the magnitude of the reforms, implementation will take effect in phases to allow time for suppliers’ systems to be fully geared up to deliver the changes.
The standards of conduct came into force on Monday, 26 August 2013. They require suppliers and any organisations that represent them, such as brokers or third party intermediaries, to ensure that each domestic customer is treated fairly. They cover three broad areas:
Behaviour: suppliers must behave and carry out any actions in a fair, honest, transparent, appropriate and professional manner.
Information: suppliers must provide information (whether in writing or orally) which is:
Process: the supplier must:
*Ofgem Enforcement Guidelines on complaints and how it carries out investigations can be found here.
Simpler – making it easier to compare suppliers
By the end of December 2013:
By 30th June 2014:
Clearer – introducing new tools to help switching
From 22 October 2013
By the end of March 2014:
Ofgem is also looking at ways in which the “stickiest” and most vulnerable consumers can be given better information on the cheapest deal across the market.
4. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.
For further press information contact:
Chris Lock: 0207 901 7225
Out of hours contact: 07766 511470