The warning to the industry was issued last week by its regulator, Ofgem, which is cracking down on gas and electricity companies in three main areas.
The first is the practice of back-billing - where a supplier fails to issue an accurate bill for several years, so that money owed is seriously underestimated, and then insists on immediate payment of the full amount.
Second, Ofgem wants an independent body set up to resolve billing disputes swiftly, and with the power to award compensation.
Finally, suppliers must review all domestic customers' contract terms to ensure that they are complying with consumer rights legislation.
These stringent demands follow an investigation prompted by a billing "supercomplaint" submitted by the gas and electricity watchdog, Energywatch.
While Ofgem's own investigation found that poor billing practices within the industry were not widespread, it warned that a small number of people suffered "real harm" when companies made mistakes.
Ofgem chief executive Alistair Buchanan said that for the vast majority of customers, the energy market worked well: "But suppliers can get things wrong and, when they do, this can cause customers real distress and hardship."
Should suppliers fail to make improvements in the three areas it has highlighted, Ofgem has powers to force them to comply. These could include imposing financial penalties.
No rate change
The Bank of England base rate was held at 4.75 per cent for the 11th month in a row last week.
In keeping interest rates at their present level, the Bank's Monetary Policy Committee has resisted calls to cut the cost of borrowing to boost consumer confidence and manufacturing industries.
Trevor Williams, chief economist at Lloyds TSB Financial Markets, said that while the decision was contrary to what the markets had expected, there was compelling evidence of inflationary pressures to justify keeping the base rate on hold.
The news came amid signs of a slowdown in the UK economy - prompting speculation that it is only a matter of time before the Bank acts to ease the cost of borrowing.
Many analysts now predict a rate cut in August.
"Further declines in both customer spending and manufacturing output make a move to a 4.5 per cent base rate likely in August," said David Bexon, chief executive of the housing website smartnewhomes.com.
"A move of this kind will be welcomed by the housing market and is likely to act as a catalyst, increasing activity and prices across the board."
Fears are growing that tens of thousands of investors who lost money in the split-capital investment trust scandal will miss out on payments from a £144m compensation fund.
There is barely a week left to go until the 18 July deadline for compensation forms to be returned to Fund Distribution Ltd (FDL), the company set up to administer claims. However, industry estimates suggest that only 17,000 of the 50,000 forms sent out to investors have so far been returned.
Last week, the compensation process came under fire from John McFall, a former chairman of the Treasury Select Committee. He reported receiving complaints from investors applying for recompense, who described the form as "bureaucratic" and "intimidating".
Often marketed as low risk, split-cap trusts were actually a complex mix of investment vehicles that put money in each other to prop up each other's prices. When the UK stock market fell in 2000, the splits began to unravel and many of them plummeted in value.
Investors' cases will be judged on an individual basis, but those who bought splits via an investment club are not eligible to apply. Compensation offers will be made in the autumn.
Anybody struggling with the forms can call FDL's helpline on 0845 606 6389 or log on to www.funddistribution.org.
More consumers are demanding to see qualifications held by independent financial advisers (IFAs) before taking advice.
As many as one in five savers visiting the IFA Promotion website to find an adviser now make a selection based on the advanced qualification he or she holds, said David Elms, chief executive.
The trend follows new rules introduced on 1 June, intended to give consumers more choice when seeking financial advice.
Known as "depolarisation", the new regime brought an end to the simple distinction between tied advice (where all the products on offer come from one company) and independent advice (where the adviser chooses from the whole market).
Now there is a third option called "multi-tie", where an adviser can choose from a small, select panel of providers.
As the market changes, consumers are becoming more aware of the need to distinguish between different types of adviser and to check their level of specialist knowledge.
However, with some 40-odd advanced adviser qualifications covering a wide range of personal finance sectors, such as pensions, mortgages, savings and investments, it can be hard to know where to start. IFAP's website, www.unbiased.co.uk, explains what each qualification means.
Anybody seeking financial advice should always ask the adviser what qualifications they hold.Reuse content