New customer compensation payments to further improve switching
Customers will receive an automatic £30 payment from suppliers if they are switched by mistake, if their switch takes longer than 15 working days, or if their final bill doesn’t arrive within 6 weeks1.
- From 1 May consumers will automatically receive £30 if they experience delays or mistakes when switching supplier
- New compensation requirements from Ofgem will protect consumers and further boost confidence in the switching process
- This follows switching compensation payments introduced last year, which have already delivered over £700,000 to customers
The new requirements, which come in on 1 May, will give customers further peace of mind that they will be compensated if something goes wrong when they switch.
They should also serve as a wake-up call for suppliers to cut out problems for customers and get switching right first time.
From 1 May 2020, customers whose switch does not complete within 15 working days, or who are switched by a supplier by mistake, will receive the payment from the new supplier. The supplier the customer is switching away from must pay out if it fails to issue a final bill within six weeks of a switch.
Ofgem introduced the first batch of compensation payments last year2, meaning suppliers must pay out if they fail to meet minimum standards around spotting and correcting mistaken switches, or refunding credit balances to customers.
Since then, customers have already received over £700,000 from suppliers. Of these payments, 27% have been for mistaken switches, while 73% have been for late credit balance refunds.
Mary Starks, executive director for Consumers and Markets at Ofgem, yesterday 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.
“Going forward, we will continue working with suppliers and consumer groups to deliver our programme for faster and more reliable switching and ensure these arrangements are fit for the future”.
Minister for Energy and Clean Growth Kwasi Kwarteng yesterday 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.”
- In September 2019, Ofgem consulted on these new compensation payments (known as Guaranteed Standards), and published the final decision on 12 February 2020. The new standards will take effect from 01 May 2020.
- These new Guaranteed Standards are part of Ofgem’s programme of work to deliver faster and more reliable switching. In 2019 Ofgem introduced the first tranche of Guaranteed Standards, requiring suppliers to pay compensation if they fail to meet minimum standards regarding how promptly credit balances are refunded to customers, as well as forcing suppliers to pay compensation if they were too slow in identifying, rectifying, and notifying customers of “erroneous transfers” (when people are switched by mistake). Both the gaining supplier and the losing supplier must pay compensation if they fail to agree that an erroneous transfer has occurred (within 20 working days), if the contacted supplier fails to provide notification to this customer of this decision (within 20 working days), and to the customer’s original supplier if they fail to re-register the customer promptly (within 21 working days). This first tranche of Guaranteed Standards took effect on 1 May 2019.
The new Guaranteed Standards introduced in May this year in the second tranche will require the gaining supplier to make a compensation payment if a customer is erroneously switched to them. This Guaranteed Standard was held over from the previous tranche in order for us to identify which supplier was most likely to be responsible for an erroneous switch.
For media, contact
Michael Anderson: 020 7901 7079
Media out of hours mobile: 07766 511470 (media calls only)
General enquiries (non-media)
If you are an energy customer looking for help and advice, including complaints about energy firms, please see our Household gas and electricity guide. Citizens Advice also provide a free, impartial helpline service across a range of issues on 03454 040506.
We also regularly share news and post general advice to help consumers get the most out of their energy services via our @Ofgem twitter and Facebook pages. If you have an enquiry or complaint relating to Ofgem’s policies or functions, contact us at firstname.lastname@example.org or on 020 7901 7295.
For all other non-media related enquiries, please visit our Contact us page.
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 energy insights and updates straight to your inbox from Ofgem, please subscribe.
Latest News from
E.ON to pay over £650,000 after taking Direct Debit payments early22/04/2021 13:15:00
Energy regulator Ofgem has closed compliance engagement with E.ON relating to Direct Debit payments being taken earlier than agreed from 1.6 million customers.
National Grid Electricity System Operator to pay £1.5 million over electricity demand forecasts08/04/2021 11:15:00
In 2017, Ofgem introduced a financial incentive to drive National Grid Electricity System Operator (National Grid ESO) to produce more accurate forecasts.
Creating a more diverse and inclusive energy sector post-Covid31/03/2021 14:20:00
The two-day virtual conference, sponsored by Accenture, is free to attend and features a host of diverse speakers coming together to discuss how the sector can move from intention to action and create a truly diverse and inclusive energy sector.
Ofgem reforms could see credit balances of around £1.4 bn automatically returned18/03/2021 13:15:00
Ofgem is consulting on proposals to limit the amount of customer credit balances suppliers can hold, which could result in as much as £1.4 billion in total or £65 per household on average being returned.
Ofgem boosts investment for Britain’s electricity networks12/03/2021 13:15:00
Ofgem has confirmed ambitious plans to boost investment in local electricity grids needed to support the growth in electric cars, small scale renewables, storage and cleaner forms of heating.
Energy network company annual reports 2019-2011/03/2021 13:15:00
Ofgem has today published the performance and financial annual reports for the 2019-20 year for electricity distribution, gas distribution, electricity transmission and gas transmission network companies.
Ofgem awards licence for grid link to world’s largest wind farm05/03/2021 10:15:00
Ofgem has awarded a licence for the grid link to the world’s largest offshore wind farm after securing a record £1.2 billion investment.
18 energy suppliers pay £10.4 million for contract renewal failures03/03/2021 13:15:00
Energy regulator Ofgem found 18 suppliers did not adhere to price protection rules, which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.