Energy suppliers will have to drastically improve customer service or run the risk of “firm action” from Ofgem, the regulator has warned.
Proposals published by Ofgem on Tuesday included new powers for the regulator to punish companies for poor service after the industry has faced scrutiny over long call waiting times and billing issues during the energy crisis.
“Today we begin the challenge of matching the high customer service scores seen in the best-ranked sectors - such as banking, retail and tourism,” Ofgem director Tim Jarvis said.
“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.”
Ofgem also suggested tweaking rules around back-charging customers and requiring automatic compensation for suppliers’ issues.
Centrica PLC (LSE:CNA)’s British Gas had been branded one of the UK’s worst energy suppliers for customer service by Citizens Advice in June, ahead of EDF Energy and Utilita.
Based on the likes of complaints and customer waiting times, this followed a surge in energy prices for consumers in recent years, with these set to rise once again in October.
Higher prices have led to rising consumer debt levels across the industry, with British Gas previously at the centre of a scandal over routine force-fitting of prepayment meters in homes that had fallen behind on bills.
This knocked the industry’s reputation and has since seen restrictions placed on prepayment meter fittings and suppliers ordered to compensate those affected.
“We have worked hard with suppliers to drive up standards and there are early signs that customer satisfaction is rising,” Jarvis added, “but this is not enough”.
Centrica shares fell 2.5% on Tuesday.