Source · Select Committees · Energy Security and Net Zero Committee
Recommendation 26
26
Deferred
Reducing Energy Ombudsman escalation time risks increased caseloads, slower resolutions, and higher consumer bills.
Conclusion
We have reservations about the Government’s proposal to reduce the time before a case can be escalated to the Energy Ombudsman from eight to four weeks. This would likely inflate the volume of cases referred to the Ombudsman, which might slow down the process for consumers to achieve redress and increase consumer bills, given that a high referral rate would increase the fees paid by suppliers, which would likely be recovered via bills. (Conclusion, Paragraph 95)
Government Response Summary
The government acknowledges the concerns regarding its proposal to reduce the Energy Ombudsman escalation period and states it is keen to identify exceptions to shortened timescales. It expects to publish an update on its consultation after carefully considering stakeholder views.
Government Response
Deferred
HM Government
Deferred
Too many Energy Ombudsman (EO) rulings are not implemented on time and in full, and all consumers should be confident that, where the EO has made a ruling in their favour, it will be acted upon. That is why the Government is proposing to create an explicit legal obligation on suppliers to implement the rulings of redress providers. The Government also wants consumers to be fairly compensated by suppliers where an EO ruling is not implemented on time and in full. This could be achieved either by introducing financial penalties administered by the EO, or by Ofgem extending their Guaranteed Standards of Performance (GSOP) framework to require suppliers to compensate consumers where an EO ruling has not been implemented. The Government and Ofgem have each been consulting stakeholders on this subject, and any decisions about GSOPs are a matter for Ofgem. The Government is also proposing to explicitly designate the Energy Ombudsman through legislation to clarify its position, providing further confidence to consumers that they will receive redress when things have gone wrong. We are also seeking views on how we can ensure that accountability arrangements for the Energy Ombudsman can deliver an efficient and low-cost service for consumers. The Government notes the Committee’s concerns about shortening the time that consumers must wait before escalating their complaint to the EO. However, the Government believes that long waiting times may be deterring consumers who would benefit from seeking redress. Where consumers are discouraged from seeking redress, problems may be left unresolved, contributing to consumer distrust and ongoing detriment. That is why we are proposing to reduce the period of time that consumers must wait before escalating a complaint to the EO, reflecting changes in the speed of communication and the need for high standards in complaint resolution. Shortening this period may also incentivise suppliers to resolve more complaints more quickly, contributing to increased trust and consumer confidence. However, the Government also recognises that they could be instances in which it is not possible for suppliers to adequately resolve a complaint within the proposed 4-week timescale due to factors outside of the supplier’s control. Where this is the case, we do not believe that it is in consumers’ interests for complaints to be escalated before a supplier has had appropriate time to resolve them. This could see complaints taking longer to resolve or add confusion because of the start of a new process involving the EO. This would undermine our objective of ensuring that the EO is playing the right role for the right consumers at the right time. Nor should suppliers bear additional costs, which would then be passed on to consumers, when they cannot be held responsible for resolving a complaint within these shortened timescales. We are therefore keen to identify where there may be potential exceptions to the shortened timescales, such as where consumer complaint resolution relies on the involvement of industry bodies that have fixed response times. We expect to publish an update on our consultation on the role and powers of the Energy Ombudsman after we have carefully considered the views of stakeholders. In relation to energy suppliers pursuing debt while the Energy Ombudsman is investigating a complaint, Ofgem has rules that require suppliers to treat customers fairly and ensure that any debt recovery activity is proportionate.