Regulator Ofgem is looking at introducing automatic compensation for energy consumers hit by late final bills, in a major victory for MoneySavingExpert.com.
We've pushed the regulator to back a six-week deadline for suppliers to issue a closing bill after a customer switches – and under proposals announced today (Tuesday 12 June) consumers would receive £30 compensation if their supplier fails to deliver in that period.
The plans also set out automatic compensation for a range of other switching issues, including being mistakenly switched to another supplier – known as an 'erroneous transfer' – and delayed switches and credit refunds, also areas where MSE has pressed Ofgem in the past.
Depending on the problem, compensation would range between £30 and £60 – and consumers would be compensated for each one they experience.
Ofgem expects the compensation scheme to be in place by the end of the year.
To check if you can switch and save £100s on your gas and electricity, use our free Cheap Energy Club.
Martin: 'The idea that you shouldn't get a final bill very late after six weeks is absolutely spot-on'
On the proposals to compensate when a supplier fails to send a final bill within six weeks, Martin Lewis, founder of MoneySavingExpert.com and Cheap Energy Club, said: "Again, it seems like Ofgem has been listening.
"The idea that you shouldn't get a final bill very late after six weeks is absolutely spot-on. For too long, people have felt that they've left an energy provider and moved on elsewhere, but then, for up to a year later, can find themselves hit with bills of £100s for outstanding energy because the company has not got its act together.
"That isn't good enough. It causes nightmarish budget problems and pushes some over the limit. Quite simply, after six weeks an energy company should give you your final bill, and at that point if it later decides it has got it wrong and you owe more money, it should not have a right to get it off you.
"They need to be more efficient, and if they're not, it's got to cost them."
In addition to late bills, MSE has also previously pushed for greater protections for consumers affected by delayed switches, erroneous switches and delays to credit refunds.
What are Ofgem's proposals?
The regulator outlined today a set of new 'guaranteed standards' for a range of switching problems commonly encountered.
Where a supplier fails to meet the new standards, it would be required to pay automatic compensation to the affected customer. In some cases, the gaining supplier (the one the consumer is switching to) and the losing supplier (the one the consumer is switching away from) will be required to pay compensation. This means a customer could receive as much as £60 in compensation.
In other cases, it's just the losing supplier or the 'contacted supplier' (the one the consumer initially contacts to report a problem) that pays compensation.
Ofgem's Proposed Switching Compensation
|Area||Proposal||Who pays and how much?|
|Delayed switches||To provide compensation when a switch is not completed within 21 calendar days from when someone applies to switch.||The gaining supplier – £30
The losing supplier – £15
|Erroneous switches||To provide compensation if suppliers fail to agree whether a switch is valid or erroneous within 20 working days of spotting a potential mistake.||The gaining supplier – £30
The losing supplier – £30
|Erroneous switches||To provide compensation when an erroneous switch happens.||The gaining supplier – £30
The losing supplier – £30
|Erroneous switches||To provide compensation if suppliers fail to send a letter to customers with 20 working days to confirm they will be returned to the correct supplier.||The 'contacted' supplier – £30|
|Final bills||To provide compensation when a supplier fails to send a final bill within six weeks.||The losing supplier – £30|
|Credit refunds||To provide compensation when suppliers fail to refund outstanding credit balances within two weeks of sending a final bill.||The losing supplier – £30|
While they're currently only proposals, Ofgem says it sees them as the best way to "achieve our stated objectives of improving consumers' experience of switching and reducing the detriment experienced by consumers when switches go wrong".
It's consulting on these proposals and aiming to publish new regulations in autumn 2018, before they take effect from 31 December 2018.
What does Ofgem say?
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.
"Today's 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."