Companies to pay for energy switch delays

ENERGY companies will face being forced to automatically compensate customers if delays caused by switching providers extends beyond three weeks.

Almost a million energy customers a year could benefit from the plans unveiled by Ofgem, the industry watchdog, which is consulting on the introduction of a minimum of £30 compensation to be paid automatically if problems switching supplier arise.

Consumers can face a litany of problems when they choose to switch, with 810,000 cases last year exceeding the suggested guaranteed standard of 21 days.

Under the new regime, which could be in place from the end of this year, customers would be automatically compensated £30 if the old supplier fails to issue a final bill promptly, £45 for a delayed switch and as much as £165 for an accidental switch.

Switching can save consumers around £300 a year, but Ofgem believes that many are put off because of worries about what could go wrong. More than half of customers have never switched or only switched once. According to the watchdog, there were 9.3 million switches of gas and electricity last year, the highest number for more than a decade. This comprised around 5.5 million customers according to Energy UK, the industry body.

Rob Salter-church, an Ofgem director, said: “While the vast majority of switches go smoothly, too many problems are still occurring. These can cause inconvenience, and in some cases, real worry and stress for those affected.

“Today’s proposals for automatic compensation will strengthen protection for consumers who switch, and should serve as an incentive for suppliers to get switches right first time.”

Suppliers would need to pay the compensation within 10 days and would have to pay out more for each additional 10 days it takes to reimburse the customer.

A spokesman for Energy UK said that the vast majority of those who switched were pleased with the process and warned that Ofgem’s proposals could undermine the “energy switch guarantee”, the industry’s own attempt to provide a standardised switching service.