Energy firm Ovo is to pay £2.37m penalty for failing to handle customer complaints effectively, energy regulator Ofgem said.
Ovo will pay £378,512 in compensation to affected customers and has agreed to pay an extra £2m to the Energy Industry Voluntary Redress Scheme “in recognition of the severity of consumer detriment caused”, according to Ofgem.
The watchdog said that 1,395 Ovo customers will receive compensation after they were affected by lengthy delays in seeing their complaints addressed with some waiting up to 18 months. Ovo has around 4 million customers in total.
It said there were also delays in Ovo acting on the Energy Ombudsman’s decision when complaints were progressed.
Ofgem stepped in last June after concerns were raised over the time taken to address complaints referred by Citizens Advice Scotland’s Extra Help Unit (EHU), and to action decisions from the Energy Ombudsman (EO).
The EHU, which helps vulnerable customers, reported that OVO accounted for a significant volume of its open casework and had lots of cases left open for too long without being resolved. Despite EHU efforts to engage with Bristol-based OVO over its complaint performance, OVO struggled to organise and manage the complaints.
The Ombudsman was concerned OVO had problems implementing its remedies in respect of complaints referred to it and, despite help and guidance from the EO, this situation continued to get worse over time.
After the regulator intervened OVO increased its complaint handling resources, enhanced its complaints management system and improved its case management processes to make sure senior staff supervised complaints.
Jacqui Gehrmann, deputy director of retail compliance at Ofgem, said: “Energy is an essential service. When things go wrong, it can cause consumers a lot of distress.
“In this case Ovo failed to adequately protect and respond to their customers when it was needed most. This is not acceptable.
“Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that Ovo’s performance was falling below acceptable standards.
Ofgem said it takes customer service and complaints resolution “very seriously and we were concerned by the lack of timely progress made by OVO towards resolving these issues.”
“We are committed to driving up standards for consumers across the board, and this action serves as a reminder to all energy companies that we will not hesitate to take swift and definitive action when they fail to comply with the rules.”
Natasha Gilmour, at Citizens Advice Scotland, said: “The Extra Help Unit is a Great Britain-wide service managed by Citizens Advice Scotland to help vulnerable consumers experiencing difficulties with their energy suppliers.
“While it’s rare for a compliance case to be necessary to resolve such issues, it is reassuring to see how OVO has responded to the investigation by Ofgem, and we are satisfied that the new practices implemented are ensuring good and timely outcomes for our clients.”
“We’ve worked closely with energy suppliers since 2008 and we’re hopeful these relationships will continue to grow as we work together to improve outcomes for consumers needing our support.”
The Energy Ombudsman said: “Our role is to resolve disputes between consumers and energy suppliers, providing independent and impartial decisions that ensure fair outcomes. These decisions are legally binding, and suppliers are required to implement them within 28 days. While the majority of resolutions are carried out on time, there are instances where consumers face unacceptable delays.
“It is reassuring to see that this investigation is now concluded, and that OVO has reviewed and improved its systems and procedures.”
Ofgem said affected customers will be contacted directly by OVO, and do not need to take any action.
Ovo, the UK’s fourth largest household energy supplier, said: “We want to make sure we give our customers the best experience we can at every turn. We’re now third in the Citizen Advice energy supplier rankings for service.
“However, we recognise that a particular group of our customers in 2023 waited longer than we’d like for a resolution and were overdue a response from us, so we’ve sent them a letter of apology and compensation to help.”