By Trevor Clawson.
The Prime Minister’s conference speech announcement that a cap on domestic energy prices is to be imposed for the second year is a reminder that the high cost of gas and electricity remains a source of frustration for consumers – who also happen to be voters – at a time when wages are barely keeping up with inflation. But according to the industry watchdog, Ofgem, the cost of energy is not the only issue that is angering significant numbers of customers. According to the regulator’s 2018 Complaints Handling survey, standards of customer service on the part of some providers are seen as unacceptably poor. So much so, that Ofgem is taking action.
First the good news. When Ofgem questioned 3,000 consumers who had complained to their energy providers, 32% were satisfied with how the issue was dealt with, representing a marked improvement on the 27% satisfaction rate recorded in 2016.
However, although some progress has been made, 57% of complainants declared themselves dissatisfied, prompting the regulator to call on gas and power utilities to raise their collective game.
“Although the level of satisfaction about complaint handling has increased over the past two years, it is still unacceptably low. Some suppliers need to be doing considerably more to get the basics right and provide a service their customers deserve,” said Ofgem Chief Executive Dermot Nolan.
Action to be Taken
And as Nolan Stressed, the regulator is prepared to do more than simply name and shame offenders.
“We will be monitoring the level of all suppliers’ customer service performance particularly closely after announcing proposals to introduce a price cap to protect those on poor value default deals from being overcharged. We are ready to – and will – act against those who fail their customers.”
But what does that mean in practice? Well, Ofgem has already launched what it terms ‘compliance cases’ against four providers. Or to put it another way, the regulator is investigating named companies that it suspects of being in breach of their obligations to customers. The outcome of those investigations can either be fines or a commitment on the part of the provider to improve very quickly.
The Problem at the Middle
The survey focuses on the so-called ‘big six’ providers, plus five more mid-sized suppliers – you could classify them as the top eleven – and there are some surprises. For instance, despite many years of intense competition in the energy markets, the big six remain a dominant force, thanks in part to the well-documented reluctance of consumers to switch suppliers, even when there are cheaper deals to be found elsewhere. Consequently, the major players are in a strong position when it comes to raising prices and they are often criticised for overcharging.
But when it comes to handling customer complaints, it is the mid-size suppliers who appear to be underperforming. Three new actions have been launched against First Utility, Ovo Energy and Utilitia. A fourth – Scottish Power – is the only big six player on the compliance case list.
That’s not to say that the rest of the industry escape criticism. Rather than giving the remaining seven providers featured in the survey a clean bill of health, it has ordered British Gas, NPower, Utility Warehouse, SSEM EDF, E.ON and Co-operative Energy to come up with improvement plans
Stuck in a Process
It has to be said that the Ofgem survey is focused squarely at how quickly and effectively energy companies deal with complaints – and not at the broader performance of suppliers in terms of how they deal with customers. In that respect, the report looks at how easy it is to complain and what happens when a complaint is registered. Happily, suppliers do make it very easy to make the first move – relevant phone numbers and e-mail addresses are featured prominently on bills, websites and apps – but once the complaint has been made the process often gets extremely frustrating.
Only half of the complainants who were questioned said they were kept up to date with the progress of their cases, and just a third were furnished with a resolution date. Consequently, complainants said they were forced to chase the companies for more information. Very few of those who complained – 22% – were told about alternative ways to push their cases forward, such as speaking to a senior member of staff or bringing in a third party to resolve the issue.
That last point is of particular concern to the Energy Ombudsman, the organisation that has the officially appointed task of resolving disputes. Chief Executive Matthew Vickers responded to the report, saying:
“One area of concern for us is that complainants are still given what the report calls “very little information” about third-party solutions and alternative redress routes such as the Energy Ombudsman. Only 15% of consumers with an unresolved complaint were sent a letter by their supplier referring them to us – the same proportion as two years ago. We would like this figure to be higher.”
The Bigger Picture
That focus on the complaints process itself may paint a slightly misleading picture of the industry, particularly in terms of the customer service provided by the Big Six and their rivals. A Which survey published earlier this year asked 9,000 domestic energy consumers about the service provided by their suppliers, with the questions covering the accuracy of bills, online and offline customer service and value for money.
Pulling all these factors together, Which found that it was the smaller companies that provided the best service, with Utility Warehouse, Flow, Octopus Energy, PFP Energy and Utilitia topping the table.
Meanwhile, the Energy Ombudsman says Ofgem’s report, with its focus on the eleven biggest suppliers, ignores problems faced by customers of those companies that are not included.
“More than 40% of complaints that come to us are about smaller suppliers, so including customers of these companies would give a more complete picture of the energy sector’s performance on complaint handling,” said Vickers.
“One area of concern for us is that complainants are still given what the report calls “very little information” about third-party solutions and alternative redress routes such as the Energy Ombudsman.”
The fact that Ofgem is requiring energy companies to improve complaints handling procedures is good news for consumers, particularly if the regulator goes on to show some real enforcement teeth. But the real key to greater consumer satisfaction with power and gas suppliers requires a attention to the factors that cause complaints to arise. These include high charges and inaccurate bills, both of which hit consumers directly in the pocket.