Scottish Power is facing a ban on sales activity unless it must meet tough targets Ofgem has set to fix the firm's customer services problems, it's been announced today.

The regulator has launched an investigation into the big six provider after discovering that its customers are experiencing "unacceptably long call waiting times" and that there's been a drastic drop in overall customer satisfaction. (Join our free Cheap Energy Club to see if you can switch and save.)

As a result of this Scottish Power has agreed to meet the following Ofgem targets to improve customer service within three months:

  • Significantly improve the speed of answering customer calls by the end of January. It will publish weekly progress reports from the end of November, detailing call waiting times.
  • Reduce the number of overdue bills. Today more than 75,000 are late; this must drop to 30,000 by the end of December.
  • Completely remove the backlog for acting on Ombudsman decisions for individual complaints by the end of November.

If Scottish Power doesn't meet these targets it will be banned from carrying out any outbound sales activity such as telesales and promotions in shopping centres. The only way it will be able to sign up new customers is if they come to it.

Separately, Ofgem has also launched an investigation into why these problems have occurred and whether or not the supplier has met rules that say it must treat customers fairly and bill them on time.

The investigation is the third Ofgem has opened of its kind. It is currently investigating Npower over late billing and customer services complaints, as well as business energy supplier Business Energy Solutions (see the Npower faces Ofgem investigation over late bill blunders MSE News story).

Ofgem won't comment on when all three investigations will be concluded.

'Scottish Power needs to get its house in order'

Archna Luthra, energy analyst, says: "A loud and clear warning bell is ringing – Scottish Power needs to get its house in order. People are entitled to a minimum level of service and Ofgem is right to intervene if Scottish Power is not delivering this.

"The energy industry lags behind many others when it comes to customer service – let's hope other suppliers take this as a stark caution that there is zero tolerance for bad behaviour.

"If you're struggling to get an issue resolved, put your complaint in writing and if you haven't had a satisfactory response within eight weeks, take it to the energy ombudsman, which can take up the cudgel on your behalf."

Scottish Power won the long fix auction of the recent collective switch. But we flagged the firm's poor customer service track record at the time and made sure Scottish Power put in place extra measures to deal with any potential issues. For those customers switching via our Cheap Energy Club, it agreed that it would respond to all customer enquiries within 48 hours.

'Energy market is not working'

Sarah Harrison, senior partner in charge of enforcement at Ofgem, says: "Ofgem's action today will drive immediate improvements for Scottish Power customers. In a properly functioning market we would expect companies to compete keenly on service.

"The need for our intervention here is yet more evidence that the energy market is not working for consumers. This further justifies our decision to refer the market to the Competition and Markets Authority."

In June, Ofgem announced it had asked the Competition and Markets Authority for a full investigation into the energy market due to concerns over "possible tacit co-ordination" on the size and timing of price rises (see the Competition watchdog to probe big six energy companies MSE New story).

Resolving customer service problems

Scottish Power puts the customer service problems down to the transferring of customers to a new system. Its CEO of retail and generation, Neil Clitheroe, says: "To further improve our customer service, we invested £200 million on a new customer management system.

"All of our customer accounts have now been transferred on to the new system and we are starting to see some of the benefits of that system being delivered, such as extending our call centre opening hours to the longest in the industry and an 'industry-first' online direct debit management service.

"The process of moving to our new system however has been challenging and resulted in service problems for some of our customers. We unreservedly apologise for these problems. It is simply not the high service standard long associated with Scottish Power, nor the customer service standards industry regulator Ofgem expects.

"We are determined to put it right. We are working hard to make it easier for our customers to contact us and to answer every call, email and complaint as soon as we can. We are increasing our staff by a further 250 people on top of the additional 450 people already recruited earlier this year to manage all customer contact and complaints as quickly as possible."