Energy companies will be challenged to match the top performing
sectors for customer service as part of an ambitious new vision
outlined by Ofgem.
Customer satisfaction levels fell to their lowest levels during
the energy crisis and, despite recent improvement, the industry
still lags behind most other sectors – and significantly behind
leading sectors which currently have the best rated customer
service, such as banking.
So today, the regulator has launched Consumer Confidence:
A Step Up In Standards – Ofgem's vision to deliver
five-star customer service fit for an increasingly complex market
transitioning at pace towards net zero.
The proposals, which will be shared with suppliers, consumer
groups and stakeholders, will underpin the regulator's mission to
drive a culture change and improve public trust in the
sector.
While competition is healthy in any sector, it cannot be relied
upon to drive the significant improvements needed in the energy
market. The sector needs clearly defined outcomes, clear
penalties and a culture of exceptional customer service across
the board.
The options include immediate changes the regulator can make and
future ambitions that may require new powers.
Ofgem's proposals include:
- Revising back billing rules on how far back a customer can be
charged for energy use, where the error was the supplier's
fault.
- Reviewing supplier billing practices to understand where
improvement is needed and how billing accuracy can be
improved.
- Building on Ofgem's existing rules to ensure consumers get
appropriate automatic compensation when basic things go wrong,
and suppliers are held accountable when they do.
- Exploring new powers for the regulator to take firm action
against failing suppliers.
- Considering adopting a model similar to the Financial Conduct
Authority's Consumer Duty.
Tim Jarvis, Director General, Markets,
said:
“Consumer trust depends on good customer service, so it is
critical that energy suppliers are reliable, accurate, accessible
and fair.
“We have worked hard with suppliers to drive up standards and
there are early signs that customer satisfaction is rising – but
this is not enough. Our goal is create a customer service culture
that sets the highest standard for all service sectors.
“So today we begin the challenge of matching the high customer
service scores seen in the best ranked sectors – such as banking,
retail and tourism – and we will be looking to understand what we
can learn from their practices.
“We are looking at the big picture here, and it's not just making
small changes we want to see today. It's about building a service
structure capable of helping customers navigate a more complex
future market, as new technology like electric vehicles and heat
pumps rapidly changes the way consumers interact with their
supplier.
“We will use all the powers at our disposal and drive the
improvements we want to see but do not think the market will
deliver without our intervention. Where necessary, we will work
with government to create more powers to continue the transition
already underway from a more reactive regulator dealing with
problems as they arise to a proactive regulator, constantly
striving for the best for consumers.
“Every energy consumer should have confidence that the system
works in their interests and when things go wrong, they will be
fixed quickly and effectively. The steps we are setting out today
will bring us closer to that goal.”
In December 2023 the regulator announced tough new rules to improve
customer service standards, including requirements for suppliers
to be easier to contact and provide proactive support for
vulnerable customers and those struggling to pay their
bills.
But Ofgem believes this is just the start and a deeper, more
ambitious culture change in supplier attitudes to customer
service is needed. This is demonstrated in Ofgem's latest set of
Energy Satisfaction Survey
results which, despite showing early signs of improvement
since the new rules came in, also show that energy companies
remain amongst the lowest rated industries across the UKSCI
sectors – 69.8% in July 2024 compared to the all-sector average
of 75.8%.
Ofgem recognises that this is not universal and there are
positive examples of suppliers seeking to enhance their customer
service – for example by developing dedicated specialist teams to
meet the more complex needs of customers in vulnerable
situations.
Improving customer service like this – and building back trust in
the energy sector – will take a collective effort from all
suppliers, consumer groups and charities, with direction from
Ofgem and government working with the regulator to ensure they
have the levers and remit they need to make real
change.
The publication of the Consumer Confidence programme is just the
first step, setting out a vision for the future of customer
service in the sector. Ofgem will work closely with stakeholders
over the coming months, consulting on the proposals.
Notes to editors
The Consumer Confidence: A Step Up In Standards policy document
will be published on the Ofgem website tomorrow (Tuesday 10
September) at 0900 hours.
