Ovo to pay £2.4m for customer complaint failures

Ofgem says nearly 1,400 Ovo Energy customers are to receive hundreds in compensation for delays in the handling of their complaints

Nearly 1,400 Ovo customers are to receive compensation after the energy firm was hit with a £2.37 million penalty by the industry watchdog for complaint handling failures.

Ofgem said that 1,395 Ovo customers were affected by lengthy delays in seeing their complaints addressed – in some cases up to 18 months.

It said there were also delays in Ovo actioning the Energy Ombudsman’s decision when complaints were progressed.

Ovo will pay £378,512 in compensation to affected customers and has also paid an extra £2 million to the Energy Industry Voluntary Redress Scheme ‘in recognition of the severity of consumer detriment caused’, according to Ofgem.

Customers will be contacted directly by Ovo, the regulator confirmed.

Jacqui Gehrmann, deputy director of retail compliance at Ofgem, said:

‘Ovo failed to adequately protect and respond to their customers when it was needed most. This is not acceptable.

‘Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that Ovo’s performance was falling below acceptable standards.’

You could be eligible for compensation if your energy supplier fails to meet minimum customer service standards.

Ovo customers compensated for ‘unacceptable delays’ 

Ofgem first contacted Ovo in June last year after reported concerns over the time taken to address complaints referred by Citizens Advice Scotland’s Extra Help Unit, as well as to action decisions from the Energy Ombudsman.

Ovo has since boosted its complaint handling operation, improving its complaints management system and making sure senior staff have oversight of complaints.

Natasha Gilmour, head of operational support at Citizens Advice Scotland, said: ‘The Extra Help Unit is a Great Britain-wide service managed by Citizens Advice Scotland to help vulnerable consumers experiencing difficulties with their energy suppliers. 

‘While it’s rare for a compliance case to be necessary to resolve such issues, it is reassuring to see how OVO has responded to the investigation by Ofgem, and we are satisfied that the new practices implemented are ensuring good and timely outcomes for our clients.’  

‘We’ve worked closely with energy suppliers since 2008 and we’re hopeful these relationships will continue to grow as we work together to improve outcomes for consumers needing our support.’

The Energy Ombudsman said: ‘We welcome today’s news that following compliance engagement between Ofgem and OVO, consumers will be compensated for OVO’s failures to implement the remedies set by the Energy Ombudsman. 

‘Our role is to resolve disputes between consumers and energy suppliers, providing independent and impartial decisions that ensure fair outcomes.

‘These decisions are legally binding and suppliers are required to implement them within 28 days.

‘While the majority of resolutions are carried out on time, there are instances where consumers face unacceptable delays.

‘It is reassuring to see that this investigation is now concluded, and that Ovo has reviewed and improved its systems and procedures.’

An Ovo spokeswoman said: ‘We recognise that a particular group of our customers in 2023 waited longer than we’d like for a resolution and were overdue a response from us, so we’ve sent them a letter of apology and compensation to help.’

Jump in compensation payouts to energy customers  

Ofgem has collected more than £400 million in payments since 2020 after taking action against energy companies who fail to comply with the rules. 

In 2023 alone, Ofgem recovered a total of £77.2 million in fines, customer refunds, compensation and alternative action payments – up by £50.5 million compared to 2022. 

Ofgem said that this has been used to help households struggling with their bills.  

Gehrmann added: ‘We are committed to driving up standards for consumers across the board, and this action serves as a reminder to all energy companies that we will not hesitate to take swift and definitive action when they fail to comply with the rules.’

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 provide 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.