Customers will receive an automatic payment of £30 from suppliers if they are switched by mistake, if their switch takes longer than 15 working days, or if their final bill doesn’t arrive within six weeks, under new requirements. The change in the rules will come into effect on May 1, 2020.
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The energy regulator has said the move aims to give customers further peace of mind that they will be compensated if something goes wrong when they switch.
What’s more, Ofgem has said that the requirements also serve as a “wake-up call” for suppliers to cut out problems for customers and ensure switching is carried out correctly the first time.
From May 1 this year, customers whose switch does not complete within 15 working days or who are switched by a supplier by mistake, will be paid by the new supplier.
Should the supplier the customer is switching away from fail to issue a final bill within six weeks of a switch, then it is this company which must pay out.
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Energy bills: Switchers could be paid £30 automatically under new Ofgem rules (Image: GETTY)
Ofgem introduced some compensation payments last year, which means suppliers must pay out if they fail to meet minimum standards around spotting an correcting mistaken switches or refunding credit balances to customers.
Ofgem said that since then, customers have already received more than £700,000 from suppliers.
Of these, 27 percent have been for mistaken switches, while 73 percent have been for late credit balance refunds.
Mary Starks, executive director for Consumers and Markets at Ofgem, 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.
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“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.”
Minister for Energy and Clean Growth Kwasi Kwarteng said: “We’ve made it easier than ever for consumers to shop around and record numbers are now switching suppliers to save on their bills.
“These tough new standards will ensure switching is as smooth as possible and consumers are always protected.”
Energy supplier: Ofgem said the change in the rules will come into effect on May 1, 2020 (Image: GETTY)
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Alex Dickson, head of research at Switchcraft.co.uk, commented: “The regulators decision to move ahead with automatic compensation is a massive win for consumers, and ultimately the UK energy industry as a whole.
“New rules are a much needed warning to suppliers, whose handling of switches and customer energy accounts has dented consumer confidence.
“Nearly 12,000 supplier-initiated switches in 2018 were the result of either ‘misleading information’, ‘suspected fraudulent marketing’ or ‘training issues’. Suppliers now have an incentive to fix these types of problems once and for all.
“A healthy and competitive energy market was never going to flourish without a properly functioning switch market.
“Today’s announcement shows OFGEM is prepared to guarantee the consumers right to access fair energy deals on a timely basis – as well as punish those companies that don’t deliver on this promise.”
Energy supplier: Some people may opt to switch to a cheaper deal (Image: GETTY)
Peter Earl, head of energy at comparethemarket.com, said: “With the twenty cheapest fixed term energy tariffs currently on the market all more than £300 cheaper than the energy price cap, switching supplier is a no-brainer for consumers looking to save money.
“It is therefore vital that nobody is deterred from the switching process, which for the vast majority is a seamless process.
“6.4 million households switched supplier in 2019. This sounds impressive, but represents less than a quarter of all households in the UK – leaving a majority of Brits likely disengaged with the switching process.
“Ofgem’s forthcoming compensation payments are a welcome financial safety net for consumers, and should act as a catalyst to any supplier which isn’t as quick-off-the-mark in facilitating the switching process for their customers as they should be.”