Energy suppliers have been told to dramatically improve their customer service or face tough intervention, amid complaints about long call waiting times and billing problems.
The energy industry regulator Ofgem said it wanted a “culture change” to dramatically reverse the conditions in an industry with a reputation for poor handling of customers, to ensure suppliers offer a service on par with retail, tourism and banking.
Customers have long complained of billing issues, suppliers holding large credit balances and lengthy waiting times to speak to advisers. The situation was exacerbated by the energy crisis, which began in 2021 and saw wholesale gas prices soar and almost 30 household suppliers collapse, leading to uncertainty for customers.
Ofgem, which was criticised for allowing the conditions that led to the failures, said it had “set a clear and ambitious benchmark for the energy sector to be the best for customer service, setting the standard for other sectors”.
As part of the overhaul, the regulator has proposed revising billing rules on how far back a customer can be charged for energy use in cases of supplier error. Ofgem also vowed to pressure retailers to improve billing accuracy.
In conjunction with the new Labour government, officials will assess whether the regulator’s powers to take action against failing suppliers can be enhanced and also consider adopting a model similar to the Financial Conduct Authority’s consumer duty, which pledges to put consumers’ needs first.
Ofgem already has the power to take action, including issuing fines, under suppliers’ service licence conditions, over problems such as long call waiting times.
New standards introduced last year also require suppliers to be more proactive in identifying struggling customers and offer different methods for consumers to contact them.
The industry’s reputation was severely damaged by the prepayment meter scandal, when suppliers were found to have been routinely force-fitting the devices. The practice was temporarily banned and restrictions on which customers could be given the meters were subsequently introduced.
Tim Jarvis, Ofgem’s director general of markets, said: “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 under way from a more reactive regulator dealing with problems as they arise to a proactive regulator, constantly striving for the best for consumers.”
In June, EDF, Utilita and British Gas were named as the worst energy suppliers for customer service by Citizens Advice.
After a period of falling bills, energy costs are due to rise again this winter. From October, Ofgem’s quarterly price cap will rise by 10% to £1,717 a year on average for a typical household.
Keir Starmer has urged Labour MPs to support his “unpopular” plan to remove the winter fuel allowance for all but the poorest pensioners ahead of Tuesday’s vote on the changes.