Energy regulator Ofgem has handed out a £2 million fine to npower for mishandling of consumer complaints. npower has become the second of the “big six” energy companies to be tagged with a heavy fine for its treatment of customer complaints, after British Gas was hit with a £2.5 million bill in July.
In its report, Ofgem concluded that npower had failed to record proper details of complaints it received, did not offer customers enough details of the energy ombudsman’s redress service and failed to implement adequate processes to handle complaints. Another “big six” company, EDF Energy, is also under investigation by the regulators for the way it handles complaints.
Ofgem’s senior sustainable development advisor, Sarah Harrison, said: “Customers of these energy companies need protecting and we must ensure that these companies do comply with the agreed standards. Npower didn’t do that and although it has acted to improve procedures since, it has been penalized for failing consumers.”
Ofgem said the company acknowledged that it had been breaching regulations and had since made changes to its complaints’ protocol. Npower is the UK’s fourth largest energy provider and supplies around over three million homes. It is owned by German group RWE.
The company’s average tariffs rose again this month with gas prices increasing by more than 15% and electricity rising by more than 7%. The company put the rocketing household bills costs down to because of rising wholesale power prices. In 2009 the firm was fined £1.8 million by Ofgem after complaints from customers about doorstep sales team mis-selling energy products.
Adam Scorer, Director of External Affairs at Consumer Focus, the consumer rights group, said: “It is justified that Ofgem can hand out these heavy fines if energy companies continue to treat customers unfairly. There must be some accountability to the consumer.”
“This is the second time one of the Big Six has been fined this year for their handling of customer complaints, and another investigation is underway. Customers expect suppliers to deal with their complaint promptly and that there will be consequences if they don’t act fairly.”
Shadow energy secretary Caroline Flint added: “Energy companies have been acting without reproach for too long and it is about time they were brought to book. Today’s announcement demonstrates that we need fundamental reform of the energy industry to end the dominance of the big six and provide real competition in this market. Unfortunately, the Government appears unable to stand up to vested interests in the energy market”.