Energy regulator confirms new compensation rules for customers

Energy firms must pay customers £30 if new five-day switch deadline missed

Energy suppliers will soon have to pay customers £30 if they fail to complete their switch to another firm within five days.

Ofgem said switching rates continued to increase each month, and it wanted to “empower” customers to take control of their energy bills.

As part of an energy supplier’s licence, a firm has to switch a customer’s electricity or gas supply within five working days from the date of the request.

Suppliers must currently pay customers £30 compensation if the switch is not completed within 15 working days but this is changing to five days from April 1.

Compensation rules for energy customer

Ofgem introduced standards to make sure customers get the service they deserve when switching energy supplier. The ‘guaranteed standards of performance rules’ rules ensure energy suppliers provide automatic compensation to customers when there are delays switching supplier, customers are switched by mistake and final bills are produced too late.

Last year, Ofgem fined three suppliers – E.On, Good Energy and Octopus Energy – £8 million for missed or delayed compensation payments.

Energy customers also have rights to compensation of up to £2,000 in power cuts.

Energy switching levels higher this year than last

Ofgem said the move followed extensive consultation and has received widespread support from leading charities and consumer groups.

The regulator said it expected more consumers to switch providers over the coming months.

Latest switching figures from the end of 2023 show a 9.3% increase compared with October 2023, and are nearly three times as high as November 2022.

Suppliers missing five-day switching deadline to pay customers £30

Melissa Giordano, deputy director for retail systems and processes at Ofgem, said: “Customers who see better energy deals on the market or experience poor service must be able to vote with their feet and move energy supplier – quickly.

“As regulator, we have already slashed the amount of time within which suppliers must switch a customer by two-thirds to just five working days. We are now going further by requiring any supplier who misses that deadline to pay the affected customer £30.

“We are already seeing switching levels up from last year, and now, this new move – welcomed by leading charities – will further empower customers to take control of their energy bills this winter and beyond.”