Posted: Mon Apr 30, 2007 9:56 am
There are big holes in the compensation net
Millions of energy customers are powerless to claim compensation for poor service, because of holes in a consumer safety net and rules which make payouts a postcode lottery.
Consumers who are owed a refund or spot a billing mistake are entitled to £20 compensation from their supplier if it does not deal with the matter speedily. The compensation kicks in if the supplier has not made a “substantive” response to a query on charges and payments within five working days.
This standard is one of many agreed between gas and electricity suppliers and Ofgem, the regulator. Separate standards also apply to the keeping of appointments and meter readings, giving consumers the right to claim compensation when standards are not kept. Suppliers can also be fined if they fall short of the standards.
However, the standard covering billing queries, known as ESG10, only applies to electricity customers, leaving millions of gas consumers without comeback. Also, it only applies to electricity customers who reside in their suppliers’ “home market”. This “home market” rule means for example that householders in Yorkshire would not be covered by the billing standard if they had switched from their incumbent NPower to EdF because the latter is London’s host supplier. By contrast, a neighbour who had stayed with NPower would be entitled to compensation in the case of poor service.
In another twist, British Gas is not obliged to offer the billing standard as it came to the electricity market after the standards were drawn up in the late 1980s.
Last week, Energywatch, the utility watchdog, outed British Gas as having the worst customer complaint record, largely because of its handling of billing disputes.
Ofgem says that the protection gap for consumers exists because the standards were drawn up in the late-1980s and had not been redrafted to reflect the modern market
Ofgem’s figures show that in four areas the incumbent supplier’s home market share had dropped below 50 per cent, meaning more than half the customers in these areas have no safety net for billing disputes.
The regulator is due to revisit its Guaranteed Standards of Performance as part of a wider review of suppliers’ licences, but says that competition offers consumers a comeback against poor service. Chris Lock, spokesman for Ofgem, says: “Consumers can easily switch if they are not happy with their supplier, which may mean they end up saving more than £20 in compensation through cheaper bills.
“Second, they have powerful redress in the form of the energy ombudsman who they can go to if they cannot resolve their complaint with their supplier after 12 weeks.”
Energywatch believes that few people may be aware of their right to compensation. In 2004/05 suppliers made 884 payments under EGS10 totalling £17,000. Some 750 of those were made by one supplier, Scottish Power.
However, following news last week that 29,000 complaints against suppliers were received by Energywatch in the six months to the end of March, it remains to be seen whether the energy ombudsman could cope with such demand.
Energywatch says there should be more stringent auditing of the standards to stop consumers falling out of the safety net. “It is fundamentally unfair to have a set of guaranteed standards which are so limited in their application that they effectively disenfranchise millions of consumers,” says Adam Scorer, director of campaigns.
The Energy Retail Association, the suppliers body, is believed to have lobbied for the removal of the standards.
“The view of ERA members is that the mechanistic and prescriptive nature of the standards and their associated reporting burden are increasingly inappropriate in a competitive market, and that it is for consideration whether any consumer detriment would result from their removal,” says the ERA.
“We believe they should be reviewed against a background of falling complaint figures, improved customer service and self-regulatory initiatives .”
Source: ft.com (Financial Times)
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http://www.iva.co.uk/forum/default.asp?CAT_ID=5
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Millions of energy customers are powerless to claim compensation for poor service, because of holes in a consumer safety net and rules which make payouts a postcode lottery.
Consumers who are owed a refund or spot a billing mistake are entitled to £20 compensation from their supplier if it does not deal with the matter speedily. The compensation kicks in if the supplier has not made a “substantive” response to a query on charges and payments within five working days.
This standard is one of many agreed between gas and electricity suppliers and Ofgem, the regulator. Separate standards also apply to the keeping of appointments and meter readings, giving consumers the right to claim compensation when standards are not kept. Suppliers can also be fined if they fall short of the standards.
However, the standard covering billing queries, known as ESG10, only applies to electricity customers, leaving millions of gas consumers without comeback. Also, it only applies to electricity customers who reside in their suppliers’ “home market”. This “home market” rule means for example that householders in Yorkshire would not be covered by the billing standard if they had switched from their incumbent NPower to EdF because the latter is London’s host supplier. By contrast, a neighbour who had stayed with NPower would be entitled to compensation in the case of poor service.
In another twist, British Gas is not obliged to offer the billing standard as it came to the electricity market after the standards were drawn up in the late 1980s.
Last week, Energywatch, the utility watchdog, outed British Gas as having the worst customer complaint record, largely because of its handling of billing disputes.
Ofgem says that the protection gap for consumers exists because the standards were drawn up in the late-1980s and had not been redrafted to reflect the modern market
Ofgem’s figures show that in four areas the incumbent supplier’s home market share had dropped below 50 per cent, meaning more than half the customers in these areas have no safety net for billing disputes.
The regulator is due to revisit its Guaranteed Standards of Performance as part of a wider review of suppliers’ licences, but says that competition offers consumers a comeback against poor service. Chris Lock, spokesman for Ofgem, says: “Consumers can easily switch if they are not happy with their supplier, which may mean they end up saving more than £20 in compensation through cheaper bills.
“Second, they have powerful redress in the form of the energy ombudsman who they can go to if they cannot resolve their complaint with their supplier after 12 weeks.”
Energywatch believes that few people may be aware of their right to compensation. In 2004/05 suppliers made 884 payments under EGS10 totalling £17,000. Some 750 of those were made by one supplier, Scottish Power.
However, following news last week that 29,000 complaints against suppliers were received by Energywatch in the six months to the end of March, it remains to be seen whether the energy ombudsman could cope with such demand.
Energywatch says there should be more stringent auditing of the standards to stop consumers falling out of the safety net. “It is fundamentally unfair to have a set of guaranteed standards which are so limited in their application that they effectively disenfranchise millions of consumers,” says Adam Scorer, director of campaigns.
The Energy Retail Association, the suppliers body, is believed to have lobbied for the removal of the standards.
“The view of ERA members is that the mechanistic and prescriptive nature of the standards and their associated reporting burden are increasingly inappropriate in a competitive market, and that it is for consideration whether any consumer detriment would result from their removal,” says the ERA.
“We believe they should be reviewed against a background of falling complaint figures, improved customer service and self-regulatory initiatives .”
Source: ft.com (Financial Times)
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk