Npower to halt telesales unless it resolves billing issues

20 Jun 2014 11:48 AM

Ofgem has secured commitments from npower to take immediate action to put right its billing and complaints issues, alongside launching a wider investigation into customer service failings under Ofgem’s new Standards of Conduct.

Ofgem is requiring npower to resolve major billing issues no later than the end of August 2014 and publish monthly progress updates on its website. Failure to meet monthly targets will result in npower ceasing all proactive telesales to new customers until they are met. The parallel investigation into npower’s customer service failings is the first case to be opened under Ofgem’s new Standards of Conduct (SoC) and could lead to a financial penalty or redress payment if they are found to have broken rules.

Sarah Harrison, senior partner in charge of enforcement said: “npower customers have suffered service failures for too long, that’s why Ofgem has secured binding commitments from npower to reduce its bill backlog or face curbs on sales, alongside launching a wider investigation under Ofgem’s new Standards of Conduct.

“Ofgem has been monitoring npower’s service closely and we have been increasingly concerned about the slow progress to tackle failings. npower’s recovery plan has not delivered as far and fast as is necessary. Our analysis of complaints data also raises some serious concerns which will be thoroughly examined in our investigation.

There has been some progress since Ofgem’s intervention in December – longstanding problems in relation to new customers and the set-up of direct debit payments have now been tackled, and many of the oldest cases of late billing have been cleared.

This move follows Ofgem’s intervention in December 2013 which led to an apology by npower’s CEO Paul Massara to all its customers, payment of £1m to good causes, and a commitment that no customer would be left out of pocket as a result of billing failures.

The SoC are part of Ofgem’s reforms for a simpler, clearer and fairer energy market. The SoC state that suppliers must treat consumers fairly. They are wide-ranging and cover supplier behaviour, the information that they provide to consumers, and their internal processes. The investigation will also look into npower’s compliance with industry complaint handling standards.

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Notes to editors

1. Npower acknowledged to Ofgem that it was experiencing issues with its billing system. In December 2013, it agreed a recovery plan with Ofgem that included monthly monitoring of its progress. It also made a goodwill gesture of £1m to vulnerable customers. Whilst it has made some progress, we are concerned that it has not yet resolved billing and complaints issues to the degree that we expected to see. It received almost 1.4m complaints in 2013, 1 for every 4 customers.

You can find the targets and commitments here.

More information on Supplier complaints handling

Information on Standards of Conduct: SOC

2. 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.

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Lisa O’Brien: 020 7901 7426

Dafydd Wyn: 020 3263 9943