Ofgem review reveals that customer service standards of energy suppliers must improve

Press release
Publication date
Industry sector
Supply and Retail Market

Today (Thursday 2 Feb 2023), energy regulator Ofgem has published supplier ratings from its fourth ‘deep dive’ into energy supplier standards. The Market Compliance Reviews are proactive, market-wide assessments of energy suppliers’ performance on key areas. 

This latest review looked at customer service and complaints performance from information submitted by 17 of the biggest domestic energy suppliers. 

Ofgem has also launched a separate urgent investigation into practices at British Gas and its treatment of vulnerable customers, which is outside the scope of the findings from this review.  

This is alongside an upcoming future market review, announced last month, which will look in more detail at Pre-Payment meters (PPMs) and the issue of forced PPM installation and remote switching from credit to PPM through smart meters, and how the whole industry handles this issue. This was outlined in the recent letter from Ofgem CEO Jonathan Brearley to BEIS Secretary of State Grant Shapps. The energy regulator will start requiring data from suppliers on this shortly. 

The latest review, published today, looked at customer service and complaints performance from information submitted by 17 of the biggest domestic energy suppliers. The review found: 

  • Weak policies and pathways for customer service journey, including incomplete communications to customers in relation to complaints 
  • Inconsistent scripts for staff handling complex calls 
  • Customers left waiting for hours on the phone on several occasions  
  • Phone calls simply not picked up and slow responses on written customer contacts 
  • Up to 50% of customers giving up and hanging up calls as not answered  
  • High rates of customer complaints upheld by the Energy Ombudsman 
  • Incomplete management information being used to monitor performance, and  
  • Weaknesses in customer service agents’ training and/or quality control mechanisms. 

As a result of the review, Ofgem found the following about specific companies: 

  • Severe weaknesses at E.ON, resulting in specific enforcement action – a Provisional Order being issued (detail below)  
  • Moderate weaknesses at 11 suppliers (British Gas, E Gas & Electricity, EDF, Good Energy, Outfox the Market, OVO, ScottishPower, SO Energy, Utilita, Utility Warehouse and Tru Energy). 
  • Minor weaknesses at five suppliers (Bulb, Ecotricity, Green Energy, Shell and Octopus) 
  • No suppliers had ‘no weaknesses’ at all.  

Ofgem communicated the ratings to all suppliers in the last few weeks and, since then, has started compliance engagement on areas needing improvement.  

These deep dive reviews undertaken are part of Ofgem’s strategy to drive up performance by energy suppliers and are yielding progress in terms of the improvements already made as a result.  

Neil Lawrence, Director of Retail at Ofgem, said: 

“From being on hold for too long, to not being given clear information, or sometimes not getting through to suppliers at all, this review has highlighted that customer service is just not good enough. In a world where customers need to be confident in consistently great care and support, it is clear that improvements need to be made. 

“We also know from talking to suppliers that the calls they are getting are more and more complex. But we expect suppliers to respond dynamically to this, updating processes, call handling scripts and having enough people to deal with the current issues and complexities.  

“The ask on suppliers may be greater due to these complexities but it’s clear today that some suppliers have risen to the challenge better than others.  

“This isn't just about the energy industry in isolation; this is about raising standards, so we are in line with other customer retail standards - getting waiting times down, making sure calls are answered and being able to give helpful information about a critical service. 

“I want to see further improvement action as a result of today’s findings, and we will take further, firm action where this doesn’t happen.” 

Customer satisfaction survey 

Ofgem’s findings on this review tally with what customers themselves are reporting. Early indications from a recent Energy Satisfaction survey of 3,000 domestic energy consumers show that in November-December 2022 (due to be published in March 2023), overall customer satisfaction with energy suppliers was amongst the worst ever seen since tracking began in 2018. 

This survey, funded by Citizens’ Advice and Ofgem, and carried out by Quadrangle Research, found that a fifth of credit meter consumers surveyed who had fallen behind on paying their bills bills disagreed that the support they received was appropriate for their needs.

At the same time, the survey also showed that consumers are finding it difficult to reach their supplier. A quarter of respondents said that it was difficult to contact their supplier via their preferred channel – a record high since tracking began in 2018. 

Suppliers are also getting more calls - with some suppliers reporting that call numbers are up by 300%.  

Most customers are not switching supplier in the current climate, so customer power is less able to drive improvements, meaning it is more critical than ever that the regulator ensures standards are maintained.  

Ofgem is also examining where it can introduce stronger, more prescriptive minimum consumer standards - working with government, consumer groups and suppliers to make sure customers are protected. 

Provisional Order 

As part of this review, Ofgem has issued E.ON Next Energy Limited (“E.ON”) with a Provisional Order, to address the severe weaknesses found in the customer service provided to its customers. E.ON is an energy supplier serving 4.6 million domestic electricity customer accounts and 3.1 million domestic gas customer accounts across GB.

E.ON’s performance on call waiting times and abandoned call rates was very poor and represented a severe deterioration in standards from when Ofgem previously analysed their performance. Considering the current market circumstances and rising costs to consumers, it is likely that more customers will need to contact their supplier for advice on billing, payment options and payment difficulties, energy efficiency advice and debt. For this reason, Ofgem considers it necessary to address this issue quickly, bringing E.ON into compliance with its licence conditions through a Provisional Order. E.ON are now to undertake actions to make improvements and Ofgem will be monitoring these closely, as it is crucial that underlying causes are addressed and customers receive an adequate service.  

Progress so far from previous Ofgem reviews  

Ofgem’s Market Compliance Reviews are working- and are yielding positive results for customers since they launched last year. One of the biggest areas of supplier improvement, driven by Ofgem’s proactive action, has been in the way that suppliers set and manage direct debits. Specific examples include: 

  • Ofgem requested all suppliers who increased a direct debit by more than 100% between February and April, look at these again. This resulted in almost a million customers having their direct debits reviewed, adjustments made for any miscalculations, including potential repayments, and consideration of whether goodwill payments were warranted. 
  • Compensation actions are progressing (£117,580 paid out to date) 
  • In total, Ofgem identified 56 concerns across the market resulting in 12 formal compliance engagements, one of which progressed to an enforcement order. To date, 53 of those concerns have been resolved to Ofgem’s satisfaction (95%).  
  • Suppliers have tightened and improved their processes linked to setting direct debits and issuing customer refunds, to help ensure consumers continue to pay the correct amount for their energy and promptly receive any refunds due, leading to increased customer confidence in these areas.  
  • The open, transformative and cooperative approach that suppliers have taken to monitoring the risk of vulnerable customers, strengthening governance around processes and controls; improvements around their Priority Service Registers (PSR) is also welcomed. 

Next steps on the back of today’s review: 

Where necessary, Ofgem will now require suppliers to make improvements to ensure they provide good customer service. Since Ofgem's initial assessment and ratings were formed, many suppliers have already responded positively based on the feedback from the review. 

All the action taken from all the Market Compliance Reviews so far can now be seen collectively. 

Additional possible future compliance action includes: 

  • Enhanced monitoring of suppliers with severe weaknesses  
  • Robust compliance actions on all noted concerns to ensure supplier improvement 
  • Liaison with the Ofgem enforcement team on additional supporting enforcement action (where needed)  
  • Regular monitoring of key call centre and contact performance stats to ensure suppliers improve where needed 
  • Robust Ofgem minimum consumer standards being developed 
  • Supplier licences can be revoked if necessary  

Notes to editors

The full Customer Service MCR compliance note.

All enforcement action and improvements related to this MCR and previous MCRs can be viewed on our compliance and enforcement page.

Customer advice, signposting and template letters can all be found at Ofgem’s flagship energy aware web pages.

Ofgem has also today updated its compliance pages with the results of its deep dives into supplier asset control and fitness and propriety: All the action taken from all the Market Compliance Reviews so far can now be seen collectively. 

Our expectations on suppliers 

We are engaging with suppliers across the market, to drive improvements in processes to ensure customers are treated fairly, and able to contact to their supplier to get the support they need. As with the previous Market Compliance Reviews, we will periodically update our compliance and enforcement page with the progress suppliers are making to complete any required actions. 

The regulator will be keeping a close eye on the actions taken to close the gaps identified through this assessment and will consider enforcement action under its Enforcement Guidelines where necessary 

Progress made so far against previous reviews

Our MCRs are driving up standards for consumers. For example, alongside the MCRs we have taken action against Utilita in relation to the identification of, and support provided to customers including those in vulnerable situations. As part of our previous MCRs, we also served Enforcement Orders to ScottishPower and Tru Energy.  

Progress made since Direct Debit Market Compliance Review: 

  • An increase in the frequency of Direct Debit adequacy assessments. This will help ensure that customers are paying the correct amount in line with the energy they use. 
  • The introduction of new safeguard controls that identify and trigger an additional adequacy review where a Direct Debit amount is due to increase outside of a set tolerance. 
  • Ensuring that surplus credit balances are either returned to customers or factored into a lower Direct Debit amount 
  • Improved refund timescales ensuring that credit balances are returned promptly when requested.  
  • Following our first MCR into direct debits, we’ve seen that 16 suppliers have now commissioned their own internal audits into direct debits arrangements 
  • 9 compliance cases closed and 95% of concerns raised (53 of 56) have been addressed. We continue to engage with the remaining suppliers to close off outstanding concerns.. 
  • 12 formal compliance investigations opened, one leading to an enforcement order against TruEnergy 
  • 16 suppliers were required to undertake a review of DD payments where payments increased by more than 100%. We then requested that the findings were audited to provide further assurance. 
  • Suppliers reported that approximately 4,000 DDs out of almost 1million reviewed were either set incorrectly or not communicated clearly (0.4%). A small proportion but nonetheless significant if you’re one of the impacted consumers 
  • Compensation actions are progressing (£117,580 paid out to date) 
  • In total, we identified 56 concerns across the market resulting in 12 formal compliance engagements, one of which progressed to an enforcement order. To date, 53 of those concerns have been resolved to our satisfaction (95%).  
  • Through our intervention we have secured a number of supplier improvements in relation to policies, processes and controls, credit balance arrangements and training. Specific examples include: 
  • The creation of formal Direct Debit and Credit Balance Refund policies where these did not previously exist.  
  • Improved refund timescales ensuring consumer credit balances are returned promptly when requested. 
  • Ensuring that surplus customer credit balances are either returned to consumers or factored into a lower Direct Debit amount. 
  • Increased frequency of Direct Debit adequacy assessments to ensure consumers continue to pay the correct amount in line with energy usage.  
  • Improved customer communications on outbound communications and self-serve portals, to enhance customer engagement and understanding.  
  • Introduction of new safeguard controls that identify and trigger an additional adequacy review where a Direct Debit amount is due to increase outside of a set tolerance. 
  • As part of the project, we requested that all suppliers perform a review of consumer Direct Debit payments that increased by 100% or more on suppliers’ SVT between February and April 2022. The objective of the task was to assess whether these payment increases were justified or not. We have found no evidence that any supplier has intentionally increased any Direct Debit payment above the adequate level. Over 900,000 Direct Debits fell into the scope of the exercise and to date issues have been confirmed with approximately 4,000 DDs. 
  • In July 2022, we opened 12 formal compliance engagements, one leading to an Enforcement Order against TruEnergy. We identified 56 concerns across the market and 53 (95%) have been adequately addressed so far. To date we have closed off 9 engagements and continue to engage with the remaining 3 suppliers. 
  • We requested that all 12 suppliers review all direct debits that increased by 100% or more between February and April 2022. We requested that an additional 4 suppliers complete the same review even though we did not identify any concerns or weaknesses with their arrangements. All 16 suppliers were required to complete an audit to verify the results of the review. 
  • Suppliers reported that approximately 4,000 DDs out of almost 1million reviewed were either set incorrectly or not communicated clearly (0.4%). A small proportion but nonetheless significant if you’re one of the impacted consumers 
  • Compensation actions are progressing (£117,580 paid out to date) 

Progress made since Customers in Payment Difficulty Market Compliance Review: 

  • In September 2022, we published the initial findings of our second Market Compliance Review on how suppliers support households who are having difficulty paying their energy bill.  
  • Through our subsequent engagement with suppliers so far, we have managed to secure various improvements including processes related to how suppliers identify and support customers in payment difficulty including those on prepayment that may have self-disconnected, policies and processes designed to ensure repayment rates are set based on ability to pay and improved signposting to third party support specialists.  
  • We continue to work with suppliers to secure improvements or adequate reassurance of compliance. [link to MCR page with table showing concluded/ongoing engagements] 

Progress made since Customers in a Vulnerable Situation Market Compliance Review 

  • In November 2022 we published our findings for the Customers in a Vulnerable Situation MCR. Following this we engaged with all suppliers on our concerns which included monitoring risk of vulnerable customers, strengthening governance around processes and controls; improvements around their Priority Service Registers (PSR) for example.  
  • We continue to engage them on their individual improvements where action is required. To date we have only closed EDF’s engagement for this MCR (W/E 27th Jan 2023) following actions taken and improvements delivered. 

Upcoming reviews 

The scope of the upcoming review into PPMs includes: 

  • Ensuring suppliers assess the suitability of PPM meters prior to installation or switching 
  • Ensuring suppliers communications, processes, supervision and decision making is robust  
  • Testing and evidencing supplier processes and procedures to ensure they can they follow their procedures 

Our approach to the assessments  

We based our assessments on the information submitted by suppliers in response to our Request for Information for this Market Compliance Review, as well as additional data on their customer service performance between October and December 2022. In addition, we have taken into account information from other sources, such as the Ombudsman Services: Energy, Citizens Advice, and other consumer bodies. Recognising growing concerns over suppliers’ customer service towards the end of 2022, we requested additional information from supplies which demonstrated a drop in customer service performance, on average, across the market. 

Other resources 

On the back of this latest review, and supported by Ofgem’s ongoing ‘energy aware’ winter campaign, customers can also check if they are eligible for extra support on the Priority Services Register by visiting www.ofgem.gov.uk/EnergyAware or by contacting their supplier directly. 

Ofgem CEO Jonathan Brearley’s speech at the Institute for Government also mentioned the increased, complex calls.