Ofgem has written to energy companies demanding they take action on poor handling of customer complaints.
The regulator’s chief executive has sent letters to the “big six” and smaller and independent suppliers about the “industry-wide failure” to handle complaints to an acceptable standard.
It follows research by Ofgem that found more than half of those who had complained – 57% of domestic customers and 52% of small businesses – were not satisfied with how their supplier handled the problem.
Furthermore, in almost half of cases where the supplier considered the case resolved, the customer did not.
Ofgem said satisfaction with Npower and Scottish Power had fallen particularly markedly, from 36% to 21% and from 44% to 20% respectively, with only SSE managing to maintain levels of satisfaction found two years ago.
Earlier this year Ofgem opened an investigation into Npower’s “prolonged customer service failings”, the first under its new standards of conduct which state that suppliers must treat consumers fairly.
In today’s letter, Ofgem warned companies to improve the speed of resolving complaints, communicate better with customers during the process and be more proactive in finding a solution.
The letter read: “The results are unacceptable. I am therefore drawing attention publicly to these findings to leave you in no doubt about the need to act quickly to improve matters.
“I expect you to provide a public response to the issues raised in this letter.”
The regulator said many customers were now responding to suppliers’ poor service by switching, with almost one in two customers having either already switched or planning to do so as a result of their complaints experience.
Ofgem chief executive Dermot Nolan said: “These satisfaction scores are frankly awful.
“Almost all energy suppliers need to improve their complaints handling as a matter of urgency. There are real business benefits to good complaints handling schemes, and it shouldn’t need a regulator to tell companies about the importance of this.
“Suppliers must now tell their customers what steps they will be taking to put things right. We are already formally investigating Npower about complaints handling and other customer service issues, and this should send a strong signal to all suppliers that, where necessary, we will take action.”
Ofgem said it was planning to bring forward the next survey of complainants to see whether the necessary improvements had happened and decide if more regulatory action was needed.
Which? executive director Richard Lloyd said: “It shouldn’t need involvement from Ofgem for energy companies to get the basics right. We found energy companies have hit rock bottom, with woeful service and dreadful complaints handling.
“This situation has been going on for far too long and it’s little wonder that consumer trust is so low. Suppliers need to respond with immediate improvements, not wait for the results of the Competition and Market Authority’s investigation.”
Gillian Guy, chief executive of Citizens Advice, said: “Energy prices are up by a third since 2010 and people are now paying well over a thousand pounds a year to heat and light their homes.
“Energy is a basic essential for every household so firms need to do everything they can do get their service right and if something does go wrong, do their utmost to fix it straight away.
“Trust in the industry will be never be restored if suppliers can’t get a grip on complaints handling. Ofgem should investigate firms where their handling of complaints, and the cause of them, could be breaking industry rules.”
A Scottish P ower spokesman said: “The installation of a new £200 million IT system throughout 2014 has led to this sudden drop in our customer satisfaction scores. All customers have now been migrated on to the new system, which has resulted in a very busy period as accounts have been brought up to date.
“Although the transition has been challenging, we have recruited more than 250 additional customer service staff to answer calls and resolve any customer complaints.
“We are confident that customers will now start to see real long-term service improvements coming through. We now have the longest call centre opening hours in the industry and have also been expanding our online services.”
Energy Secretary Ed Davey said: ” It is unacceptable that so many customers have not received the customer service they deserve.
“Our reforms are making it easier and quicker for people to switch energy suppliers, particularly to the growing number of independent suppliers, so all energy companies need to be doing more for their customers.”
Npower’s director of domestic retail business, Roger Hattam, said: “We welcome this feedback from Ofgem as we’re always looking to improve the way we support our customers.
“This research was undertaken in February, and since then we have made real steps forward in improving our service. For example, since June we have reduced the number of late bills by over 75% and the number of complaints we received by nearly 30%.
“These improvements have involved allocating 1,500 of our people to help resolve our problems and around £20 million of extra spend. This demonstrates how seriously we take improving our customer service and it’s an improvement we are determined to continue.”
Trade association Energy UK said: ” Handling complaints well is a must. Suppliers are committed to improving and a programme of change is under way.
“Every complaint is taken seriously and customers should not suffer in silence. Energy companies work hard to provide the best service for their customers but, in an industry serving 27 million households, sometimes things go wrong.
“Many complaints are customers raising concerns about inaccurate bills, often resulting from estimated or incorrect meter readings. These are normally resolved by a simple telephone call and will become a thing of the past as new smart meters are rolled out across the country. Most other complaints, if they can’t be sorted out by phone, are nearly always resolved in 24 hours.
“Complaints have risen, in some specific cases, when new systems were being installed. More generally, there is a heightened interest and concern about the cost of living and energy bills and, as policy costs and building new low-carbon generators can increase industry and household bills, complaints may well remain high.
“With over 20 suppliers to choose from, we would encourage customers to shop around to make sure they are on the best deal and getting the best customer service.”