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Allocation of energy company redress payments will be managed by an independent expert body, under changes to Ofgem’s redress process announced today.

Voluntary redress payments are in lieu of, or in addition to, a financial penalty following enforcement action. When energy companies break the rules, they can agree to make payments to help energy consumers through charities, trusts and third party organisations under Ofgem’s redress process. 

This money can pay for anything from making a home more energy efficient, to providing advice which helps struggling consumers keep on top of their bills. This is in addition to money that rule-breaking energy companies pay directly to affected customers.

Currently, the energy company proposes which charitable organisation to pay this money to. Ofgem either accepts or rejects their proposal according to published principles.

Although the existing framework is working well, we want to make sure that these payments deliver maximum benefit for Great Britain’s energy consumers. 

Following consultation, we have decided that this process will be managed by an expert independent third party organisation which will be appointed following an open procurement process. This will make sure that funding is well targeted, and is the best way to maximise the long-term positive impact of voluntary redress payments for energy consumers across Great Britain – and in particular consumers in vulnerable circumstances.

We will initiate the procurement process in early 2017 to choose an appropriate third party. We plan to announce the result in summer 2017. 

Ofgem’s changes will ensure the redress process is as robust and transparent as possible, making sure that consumers receive maximum long-term benefit through the millions secured through our regulatory work.

Notes to editors

• In 2014 and 2015 £73.5 million was given to charities and 223,000 energy consumers benefited as a result. This was in addition to compensation that companies paid back to directly affected customers during this period.

About Ofgem

Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.

For facts, figures and information about Ofgem’s work, see Energy facts and figuresor visit the Ofgem Data Portal. 

Follow us on Twitter @ofgem and LinkedIn

Further information for media

For further information, contact:

Media out of hours mobile: 07766 511470 (media calls only)

Ruth Somerville: 0207 901 7460