The Energy regulator Ofgem found that 18 suppliers did not adhere to price protection rules, which protect a customer’s tariff price when they decide to either switch suppliers or tariffs after a price increase.
In total, over 1 million customers were overcharged over £7.2 million.
The customers affected included those on a standard variable tariff who switched to another supplier but did not have their variable tariff price protected during the switch,
Customers on a fixed-term tariff who switched to another supplier but did not have their fixed term tariff protected during the switch, and customers on a fixed-term tariff who moved to another tariff with their supplier but did not have their fixed-term tariff protected during the switch.
Most of the failures were down to suppliers not having adequate arrangements in place to make sure the protections were applied in full when customers decided to switch.
The suppliers have since agreed to refund all affected customers, and in some cases make goodwill payments, to the tune of £10.4 million. Where it has not been possible to process refunds, the suppliers have agreed to make payments to the energy redress fund.
Ofgem made clear to suppliers that customers’ tariffs are protected while either switching suppliers or tariffs and they need to ensure their systems, processes and practices are fit for purpose.
Ofgem expects all suppliers to ensure that they comply with these requirements and if further non-compliance is identified, Ofgem will be likely to take formal action.
Anna Rossington, interim director of retail at Ofgem said:
“Customers should have confidence in switching and not be overcharged when doing so. This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.
“It also shows that, where appropriate, Ofgem is prepared to work with suppliers who have failed to comply with the rules, but who are willing to self-report issues and put things right for their customers.”
