In recent months, Ofgem has shone a light on areas across both the domestic and non-domestic market where suppliers could improve their practices for customers and go beyond what they are obligated to do in the licence conditions. In a time of significant and extended volatility, the regulator has brought attention to several issues that non-domestic consumers in particular are facing in the market; for example, excessive security deposits and risk premia, difficulties with contacting suppliers, and increased charges under deemed rates and in standing charges. Ofgem has called on suppliers to take action to address these problems, and in December 2022, published a letter setting out a range of good practices regarding the handling of debt and disconnection. It advised that suppliers should look to incorporate these recommendations into their day-to-day operations.
Ofgem has made it clear that transparency with customers is key for engagement, with a focus on supplier collection processes occurring when a customer falls into debt. It noted that many suppliers include a copy of their collections process on their website to allow customers to understand what stages occur and when. It also recommended suppliers should review their debt and disconnection pathways, and that where these are short, they ensure that proactive communication is made with customers. Examples given include sending letters at key stages of the pathway and following this up with phone calls, or through the customers preferred method of communication.
Where charges are concerned, Ofgem highlights that suppliers should ensure the security deposits their customers pay are set appropriately and should not exceed a “reasonable amount”. To refund a customer, Ofgem also recommends that, where it is fair and reasonable, it should be returned within 10 working days to the customer. During the disconnection process, charges should be “reasonable and proportionate” in the way they are applied – suppliers have been encouraged to empower employees to be flexible, and where appropriate, to waive certain charges.
Another key point made by the regulator is the ability to check for vulnerable customers. While there has been a keen focus on this in the domestic market with a market compliance review, those domestic customers who are in a shared occupancy with non-domestic premises are not to be forgotten. Suppliers should use site visits as an opportunity to identify any domestic residents and assess whether they fall into the vulnerable category. Where they do, non-domestic suppliers should take all reasonable steps to avoid disconnection and ensure that they sign up to the Priority Services Register if possible.
Further to this point, the regulator highlights the importance signposting to third parties and the provision of key information. Given the current energy market volatility and exposure to high prices, it is imperative that where consumers find themselves struggling, suppliers can point them towards help, for example through organisations such as Business Debtline, and Citizens Advice.
In a more recent letter on 3 February, Ofgem reiterated the above points directed that non-domestic suppliers should conduct a board-level review of their procedures regarding debt and disconnection, in relation to the key points it outlined in its December letter, by 14 February. The aim of this is to ultimately improve the customer experience and outcomes, and that by implementing more of these good practice recommendations, suppliers can help to provide some reassurance to customers in a market that continues to fluctuate.
We keep track of all updates and developments to the supplier compliance landscape, similar to that included in today’s blog, for both domestic and non-domestic suppliers through our Energy Supplier Compliance Portal. If you are interested in attending our compliance update webinar for suppliers on 9 February at 10am, click here to sign up.
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