Automatic compensation for switching errors
Consumers could soon be automatically compensated if they experience issues in switching energy suppliers under plans announced by Ofgem.
Under a consultation launched on June 12, suppliers will be required to pay at least £30 in compensation for each switching problem. The proposals are intended to cover erroneous and delayed switches as well as late final bills and credit balance refunds, the regulator said.
Problems covered include being mistakenly switched to another supplier, known as an “erroneous transfer”, or switches taking longer than 21 days to complete.
Automatic payouts could also be triggered by suppliers which are late in sending final bills or refunding credit balances to customers who are leaving.
According to research conducted by Ofgem, people are often put off from switching because of worries something may go wrong, especially if they have experienced a problem before.
Last year, 5.1 million electricity consumers and 4.1 million gas consumers in total switched supplier, the highest number for almost a decade.
In February, Ofgem gave the green light to a programme to overhaul industry systems by 2020 to allow people to switch by the next working day and reduce the number of switches which go wrong.
Announcing the proposals, Ofgem said the programme could be in place by the end of the year.
Rob Salter-Church, interim executive director of consumers and markets at Ofgem, said: “While the vast majority of switches go smoothly, too many problems are still occurring. These can cause inconvenience, and in some cases, real worry and stress for those affected.
“These proposals for automatic compensation will strengthen protection for consumers who switch, and should serve as an incentive for suppliers to get switches right first time.”