Ofgem sets out vision for customer service culture change to make energy sector best in Britain
Energy companies will be challenged to match the top performing sectors for customer service as part of an ambitious new vision outlined by Ofgem.
Customer satisfaction levels fell to their lowest levels during the energy crisis and, despite recent improvement, the industry still lags behind most other sectors – and significantly behind leading sectors which currently have the best rated customer service, such as banking.
So today, the regulator has launched Consumer Confidence: A Step Up In Standards – Ofgem’s vision to deliver five-star customer service fit for an increasingly complex market transitioning at pace towards net zero.
The proposals, which will be shared with suppliers, consumer groups and stakeholders, will underpin the regulator’s mission to drive a culture change and improve public trust in the sector.
While competition is healthy in any sector, it cannot be relied upon to drive the significant improvements needed in the energy market. The sector needs clearly defined outcomes, clear penalties and a culture of exceptional customer service across the board.
The options include immediate changes the regulator can make and future ambitions that may require new powers.
Ofgem’s proposals include:
√ Revising back billing rules on how far back a customer can be charged for energy use, where the error was the supplier’s fault.
√ Reviewing supplier billing practices to understand where improvement is needed and how billing accuracy can be improved.
√ Building on Ofgem’s existing rules to ensure consumers get appropriate automatic compensation when basic things go wrong, and suppliers are held accountable when they do.
√ Exploring new powers for the regulator to take firm action against failing suppliers.
√ Considering adopting a model similar to the Financial Conduct Authority’s Consumer Duty.
Tim Jarvis, Director General, Markets, said:
“Consumer trust depends on good customer service, so it is critical that energy suppliers are reliable, accurate, accessible and fair.
“We have worked hard with suppliers to drive up standards and there are early signs that customer satisfaction is rising – but this is not enough. Our goal is create a customer service culture that sets the highest standard for all service sectors.
“So today we begin the challenge of matching the high customer service scores seen in the best ranked sectors – such as banking, retail and tourism – and we will be looking to understand what we can learn from their practices.
“We are looking at the big picture here, and it’s not just making small changes we want to see today. It’s about building a service structure capable of helping customers navigate a more complex future market, as new technology like electric vehicles and heat pumps rapidly changes the way consumers interact with their supplier.
“We will use all the powers at our disposal and drive the improvements we want to see but do not think the market will deliver without our intervention. Where necessary, we will work with government to create more powers to continue the transition already underway from a more reactive regulator dealing with problems as they arise to a proactive regulator, constantly striving for the best for consumers.
“Every energy consumer should have confidence that the system works in their interests and when things go wrong, they will be fixed quickly and effectively. The steps we are setting out today will bring us closer to that goal.”
In December 2023 the regulator announced tough new rules to improve customer service standards, including requirements for suppliers to be easier to contact and provide proactive support for vulnerable customers and those struggling to pay their bills.
But Ofgem believes this is just the start and a deeper, more ambitious culture change in supplier attitudes to customer service is needed. This is demonstrated in Ofgem’s latest set of Energy Satisfaction Survey results which, despite showing early signs of improvement since the new rules came in, shows that more improvements need to be made. Further, data from the UK Customer Satisfaction Index (UKCSI) shows energy companies remain amongst the lowest rated industries across the UKCSI sectors – 69.8% in July 2024 compared to the all-sector average of 75.8%.
Ofgem recognises that this is not universal and there are positive examples of suppliers seeking to enhance their customer service – for example by developing dedicated specialist teams to meet the more complex needs of customers in vulnerable situations.
Improving customer service like this – and building back trust in the energy sector – will take a collective effort from all suppliers, consumer groups and charities, with direction from Ofgem and government working with the regulator to ensure they have the levers and remit they need to make real change.
The publication of the Consumer Confidence programme is just the first step, setting out a vision for the future of customer service in the sector. Ofgem will work closely with stakeholders over the coming months, consulting on the proposals.
Ofgem is Great Britain’s independent energy regulator.
We work to protect energy consumers, especially vulnerable people, by ensuring they are treated fairly and benefit from a cleaner, greener environment.
We are responsible for working with government, industry and consumer groups to deliver a net-zero economy, at the lowest cost to consumers; stamping out sharp and bad practice, ensuring fair treatment for all consumers, especially the vulnerable; enabling competition and innovation, which drives down prices and results in new products and services for consumers.
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