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Finding best practice in Ofgem’s compliance engagement outcomes

Emma  Bill Emma Bill Analyst
21st October 2020

The past few months have involved a shake-up of the status quo for all of us, with the ramifications of COVID-19 having a disproportionate impact across society. Being an essential service, energy has been at the forefront of policy-makers minds as suppliers have sought to ensure that those most severely impacted stay on supply. The pandemic has magnified the day-to-day experiences of low-income households who struggle to afford life’s necessities, including energy to heat their homes. This has led to policy intervention requiring suppliers to adjust their practices to help consumers continue to pay for the energy they need during this uncertain time. How suppliers should and can support customers who find themselves in vulnerable circumstances as a result of the pandemic has been one area of focus for the industry.

We have seen a number of good practice guides issued by Citizens Advice that promote ways in which suppliers can support vulnerable, often prepayment meter, customers during the pandemic and beyond. Ofgem has also shared details of its compliance and enforcement activity, with some notable emphasis on lessons learned following its engagement with suppliers. We look at the outcomes of these cases through our upcoming Energy Supplier Compliance Portal update, with a view to sharing best practice in several prominent areas such as supplier-customer communications and support for those struggling financially and take a look at a couple of examples in this blog.

One compliance case this year where lessons can be learned involved the incorrect transfer of information to third party Distribution Network Operators (DNOs), which resulted in the removal of a large proportion of Priority Services Register (PSR) customers from the DNOs’ PSR. Customers on the PSR are provided with additional services including advance warning of a planned power outage and prioritised re-connection during a power outage. The supplier corrected the error and compensated PSR customers who suffered a short power outage during the time they were not on the DNOs’ register. Ofgem cited the importance of robust processes being in place for suppliers so that they can regularly check that their internal systems are suitable and fit for purpose and, ultimately, avoid any IT failings.

There are also learnings from another compliance case where one supplier failed to directly inform some of its prepayment meter customers (many of them vulnerable) of the change in the top-up provider used by those customers. In opting not to receive marketing communications, these customers were erroneously deselected from receiving communications relating to the change. Ofgem said that the incident affected customers in terms of wasted journeys or, in some cases, going off supply. In terms of lessons learned, the regulator said that customers should receive communications about operational changes in enough time so that they can (should they wish) switch supplier before the change is implemented. Ofgem also noted that when communicating with a large cohort of customers, it is important that suppliers ensure that the content is appropriate for all of those customers. This latter point is relevant to the importance of maintaining accurate customer data as a supplier, and especially customer details regarding specific vulnerabilities likely to impinge on communication needs and/ or preferences.

While the outcomes of Ofgem’s compliance and enforcement work provide a benchmark for understanding the behaviours it expects to see, it is up to suppliers themselves to translate these learnings into practice. While some of the learnings necessitate reliable IT systems and robust governance processes, others come down to empowering front line staff through the provision of customer service training and having dedicated teams in place to communicate with customers who require additional support.

Suppliers want to support their customers as best they can. The supply licence is a mammoth rulebook which over recent years has become open to wider interpretation off the back of principles-based regulation. This is why identifying and implementing good practice and lessons learned is more important than ever going forwards.

In our November podcast we will be considering the value of best practice brought about through Ofgem’s enforcement work with suppliers. We will set out how this information has been encompassed within the portal and touch on some of the other important developments in the regulatory sphere that we have seen in the last quarter.

In addition, through our offerings in supplier compliance – including our Compliance Service and Energy Supplier Compliance Portal – we interpret the regulatory framework to understand specific, enforceable, obligations. We are able to give our opinion on specific compliance queries based on our understanding of the supply licences and other legislation, as well as other Ofgem and government sources, to help suppliers achieve good consumer outcomes and deliver best practice.

Please contact e.bill@cornwall-insight for more information.