MSE News

Energy firms to pay £30 automatic compensation for more switching delays and mistakes

Energy firms to pay £30 automatic compensation for more switching delays and mistakes

Energy firms will soon be forced to give automatic compensation for a much wider range of switching delays and errors, under new rules announced today – including if you don't get a final bill from your old supplier within six weeks.

From 1 May 2020, those in the following situations will receive the payment from their new supplier:

  • Customers whose switch does not complete within 15 working days.
  • Customers who are switched by a supplier by mistake.

In addition, the customer's old supplier must pay out if it fails to issue a final bill within six weeks of a switch.

If multiple issues occur simultaneously, you can get £30 for each of them – so if a switch was not completed within 15 working days and your old supplier didn't issue a final bill within six weeks of the switch, you'd receive £60.

The announcement comes after the energy regulator Ofgem introduced a first wave of guaranteed standards last year, meaning suppliers must pay out if they fail to meet minimum standards around spotting and correcting mistaken switches, or refunding credit balances to customers.

To check if you can switch and save £100s on your gas and electricity, use our free Cheap Energy Club.

How do you get the compensation?

If you're due compensation, it should be paid to you automatically. If you don't get it, you should contact your new or original supplier immediately to let it know – it's then up to that supplier to sort it. If it's not sorted, you can go to the Energy Ombudsman.

The method of payment is up to the supplier. It could be a bank transfer or credit card refund if it has your details, or it may send you a cheque. If you have a prepayment meter, it can also add credit to that, which can be used with that supplier and any you may switch to.

What automatic compensation do firms already pay?

Ofgem introduced a series of rules in May last year to ensure energy customers get compensation for some switching issues. These situations will lead to compensation payouts in addition to the new circumstances, and are:

  • A late credit balance refund. You get £30 automatic compensation if your previous supplier fails to refund your outstanding credit within 10 working days of sending your final bill.

  • A failure to identify a mistaken switch. You get up to £60, potentially £30 compensation from each supplier, if they fail to agree whether a switch is valid or whether a mistake has been made within 20 working days of you flagging a potential mistake.

  • A failure to acknowledge a mistaken switch. You get £30 compensation from whichever supplier you choose to contact about the mistaken switch, if it fails to send you a letter within 20 working days to confirm you'll be returned to your correct supplier.
  • A failure to rectify a mistaken switch. You get £30 compensation from your original supplier if it fails to re-register you within 21 working days.

If an energy firm breaches any of these standards, it has to pay you the automatic compensation within 10 days of the missed deadline. If it fails to do this, it will have to pay a further £30.

Are there any exemptions?

There are some scenarios where suppliers are exempt for paying out the compensation.

These include:

  • If the customer supplies inaccurate information to their supplier.
  • The supplier suspects fraud.
  • The supplier goes bust.

What does Ofgem say?

Ofgem's executive director for consumers and markets Mary Starks said: "More customers are switching than ever, with a record 6.4 million changing supplier in 2019. But we also know that a minority can still experience problems when they switch.

"As part of our commitment to protecting consumers and enabling competition, we are introducing these new standards to give customers further peace of mind, and to challenge suppliers to get it right first time.

"Going forward, we will continue working with suppliers and consumer groups to deliver our programme for faster and more reliable switching and ensure these arrangements are fit for the future."