Response to Ofgem Consultation on Customer Service

OFGEM Consumer Standards Statutory Consultation 

Response by John Howard of Consumer Insights 

Date

John Howard is a former Non Executive Director of Ofgem, former Chair of the Financial Services Consumer Panel, an award winning journalist and Director of Consumer Insights.

Thank you for the opportunity to comment on this statutory consultation. The energy retailers have seen a turbulent environment in the last few years with many companies folding and their customers being allocated to other suppliers. This environment appears to have led to a significant decline in standards of customer service, probably for cost cutting reasons, and inevitably increased customer dissatisfaction.  We are of the opinion that Ofgem’s intervention will be timely and lead to improved services for customers.

The energy sector is not alone in this and we have seen similar falling standards in the telecoms and financial sectors. We would suggest that some basic rules should apply across all the utilities and would wish to recommend to the UK Regulators Network that they undertake this as a priority. We would propose that, as a minimum, all utilities should abide by the following:-

1. The medium of communication should be the choice of the customer and those made available must include telephone, email and writing.

2. These contact details should be no more than one click away from the home page.

3. Closing an account must be no more difficult than opening it.

4. Ombudsmen should make realistic financial awards to customers for distress and inconvenience due to poor customer service which will drive better standards.

5. Emergency numbers should be available 24/7.

6. The use of debt collection agencies should not mean suppliers avoid their responsibilities or make customer’s contact with suppliers more difficult.

We now include our responses to the questions contained in Ofgem’s Statutory Consultation document.

Question 1: Do you have any comments or questions on our proposed licence changes to improve supplier contact ease? 

We agree with the proposed new licence requirements for enquiry services, that they be provided by the supplier for free for customers in vulnerable situations who are at risk of detriment from a service that is not free. 

However we see no reason why basic contact services should cost any customer anything - whether they are vulnerable or not. This should especially be the case with regard to complaints.  A customer should not be expected to pay to make a complaint.

All companies should offer a range of contact methods that reflect customers’ needs. At the very least this should include, telephone, email and post and these details should be available one click from the company’s home page and on all written communications from the company. 

The method of contact should be chosen by the customer and not imposed upon them by the company. The customer is best placed to decide which channel suits them best.

We agree that communication channels should be open at times that meet customers’ needs and that this will require suppliers to be open for extended hours.

We agree that they should be open 24/7 for customers that have lost power or gas due to supplier issues. 

We agree that companies should prioritise customers in vulnerable situations that require immediate support, or representatives acting on their behalf. 

Question 2: Do you have any comments or views on our proposed contact ease guidance document? We would welcome evidence of ways in which suppliers are already delivering best practice. 

We are particularly concerned about some utility companies not providing easily found email contact details. Email seems to us to be an important channel of communication for the following reasons:

1. If phone lines are busy it provides an immediate method of sending information to a firm allowing a customer to get on with their day rather than hanging on the phone.

2. It leaves the customer with a written record of their communication and that of the company, which can be vital if there is a subsequent dispute.

3. Many customers prefer a written communication to a phone conversation as evidenced by Ofgem’s own research.

Question 3: Do you have any comment or questions on our proposed licence changes to better support customers struggling with their bills? 

We agree with the proposed licence changes.

Question4: Do you have any comments or questions on our proposed licence changes to require suppliers to publish information on their customer service performance, as measured by Citizens Advice? 

We agree with these proposed licence changes.

We would also encourage Ofgem to consider whether the Energy Ombudsman has an important role to play here.

The Energy Ombudsman has the power to order a supplier to make payments for a customer’s “Time and Trouble” due to e.g. the supplier’s poor customer service.

From the ‘Energy Ombudsman’ website:

“If we consider a financial offer should apply to resolve your dispute, the amount will depend entirely on the complexity of the issues and the information we receive from you and the company. The most common financial award is around £50, this is sometimes referred to as a Time & Trouble Award.”

This could be a powerful tool to maintain and improve customer service standards but probably not at the level of £50 especially when the energy companies, through their debt collection agencies are making claims for costs of many hundreds of pounds.

We believe that Ofgem should direct the Energy Ombudsman to award payments for ‘Time and Trouble’ at a more realistic level and encourage consumers who have been treated badly to make claims for such payments.

Annual statistics on ‘Time and Trouble’ payments awarded by the Energy Ombudsman could also be published as referred to in your question.

Question 5: Could you provide any further, detailed evidence on the potential costs and benefits of our revised proposals?

We would question the additional costs quoted by companies for providing this level of customer service. Their argument does not appear to take into account the lack of effectiveness of the present contact policies of the companies and there is evidence to suggest that proper ‘consumer friendly’ contact arrangements can reduce costs for companies. If a company deals with a customer effectively, first time, the matter will be closed and the customer will be satisfied. If not, protracted communications are often necessary entailing considerable costs to the company and the customer.

We have an ongoing complaint about a bill which has lasted almost a year and involved X email messages, X letters and numerous telephone calls when all that has been required is an updated bill using actual readings rather than estimates. 

The supplier has now also involved two separate debt collection agencies none of which seem able to answer simple questions about the account involved. One of these agencies has assigned a new reference number to the complaint and appears unable to relate it to the original account.

This raises another important issue with regard to the use of outside agencies by energy retailers. Most companies seem to hand on debt collection to third party agencies. However this should clearly NOT mean that the  electricity supply company has handed over responsibility for the customer or that it has avoided meeting Ofgem’s licence requirements. 

In the case cited above the energy retailer no longer responds to even written communications and appears to have delegated all responsibility to debt collection agencies.

It would not be appropriate to prevent suppliers using the services of debt collection agencies but the supply company should be held responsible for everything it’s agencies do. And the use of such agencies should not involve making the customers’ contact with the supplier more difficult.

Question 6: Could you provide detailed evidence or information on the proposed timescales for implementation of our revised proposals?

We have no comment on this question.

ENDS