Ofgem
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Energy supplier pays £1.65m for customer service failures
Maxen Power – an energy company supplying more than 10,000 non-domestic customers - has paid £1.65million for customer service failures.
A recent investigation carried out by energy regulator Ofgem found that Maxen Power breached its licence conditions by not having robust systems in place to protect its customers. This allowed third-party reps to sign up new customers without their consent by claiming to work for other suppliers.
Ofgem also found evidence that the east London based supplier put unreasonable requirements on customers to evidence a change of tenancy by asking for a large number of documents. The time taken to pull these documents together risked tenants being locked into a more expensive ‘deemed rate’ tariff which can lead to a build-up of debt and financial difficulty.
Maxen Power also failed to put an adequate complaint handling process in place, and as a result, had an unusually high number of complaints for an organisation of its size. The majority of complaints related to poor communication with customers, difficulty changing tenancy and mis-selling tariffs
Dominic Alexander, deputy director of enforcement at Ofgem, said:
“Our duty is to protect energy consumers, and we expect all suppliers to treat their customers fairly.
“But it’s clear that Maxen Power fell significantly short of our standards. And it’s concerning to hear that some business customers faced debt and financial difficulty because of their supplier’s failure to provide an easy, transparent and reliable service.
“Earlier this year we issued Maxen Power with a provisional order requiring them to improve their customer service and ordering them to commission an independent report into the start-to-end customer journey and identify any improvements.
“This outcome serves as a reminder to all non-domestic energy suppliers that this behaviour is unacceptable, and that we will take action quickly if standards aren’t up to scratch.”
As a result of these licence breaches, Maxen Power has paid £1.65million to the Energy Industry Voluntary Redress Fund which provides money to charities that deliver energy-related projects and support energy consumers in vulnerable situations.
The regulator has increased its monitoring of Maxen Power and has been working closely with the supplier to update its policies, processes and contractual terms to better serve its customers. This includes updating its deemed rates policy to safeguard customers from volatile price changes and updating its change of tenancy policy to make it easier to change suppliers.
Notes to editors
- A "deemed rate” means rates charged in terms of a deemed contract created by paragraph 3 of Schedule 6 to the Electricity Act 1989
- Energy companies regulated by Ofgem that breach their licence conditions may be asked to pay a sum of money to the Energy Industry Voluntary Redress Scheme to remedy any harm caused to consumers
- The Energy Redress Fund provides money to charities to deliver energy related projects that support energy consumers in vulnerable situations. It also helps to deliver benefits to consumers who were negatively impacted by the specific issue that triggered the redress payment
- Ofgem’s new consumer standards framework can be found on our website
On licensees
- The obligation for licensees to comply with licence conditions is enforceable by the Authority (Ofgem) as a relevant condition for the purposes of section 25 of the Electricity Act 1989 and section 28 of the Gas Act 1986. If the Authority considers that a licensee has contravened (and continues to contravene) a licence obligation, it may take enforcement action
- SLC 0A requires that suppliers must ensure that each non-domestic consumer is treated fairly
- SLC 4A requires licensees to maintain robust internal capability, systems and processes to enable them to efficiently and effectively serve each of its customers, efficiently and effectively identify likely risks of consumer harm and to mitigate such risks and comply relevant legislative and regulatory obligations
- SLC 5A requires the licensee to be open and cooperative with the Authority (Ofgem), including the disclosure in writing or verbally of any circumstance relating to the licensee of which Ofgem would reasonably expect notice to perform its statutory functions
- SLC 7.3 requires licensees to take all reasonable steps to ensure the terms of their Deemed Contracts are not unduly onerous
Related links
Original article link: https://www.ofgem.gov.uk/press-release/energy-supplier-pays-ps165m-customer-service-failures
