EDF has been ordered to pay out £3 million to benefit “vulnerable customers” after an investigation by the energy industry watchdog Ofgem found that the big six supplier had breached complaint handling rules.
The payout is the latest in a series of punishments meted out to the dominant energy suppliers and came just a day after Labour promised to strip any provider of its operating licence if it mistreated customers by repeatedly breaking the rules.
The inquiry into the French state-owned utility came after the company recorded an increase of more than 30 per cent in the levels of complaints during the introduction of a new IT system in 2011.
“EDF Energy failed to have sufficiently robust processes in place when they introduced the new IT system and this led to the unacceptable handling of complaints,” said Sarah Harrison, Ofgem’s senior partner with responsibility for enforcement.
Ofgem found that between May 2011 and January 2012, EDF Energy did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with handling rules. Many customers experienced unacceptably high call waiting times, with many deciding to hang up due to the company encountering a number of unexpected technical problems, Ofgem said.
When customers did get through, there was evidence that the supplier failed to record all the required details for the complaints received. These included the date of receipt, a summary of the complaint and action taken, which could have led to difficulties in tracking progress of consumer complaints. At times when the new systems were down, complaints were not logged until some time after they were actually received, Ofgem said.
Beatrice Bigois, EDF Energy’s managing director of customers, said: “Despite our best efforts and extensive planning to manage this transition in 2011 without impacting our customers, we recognize that for a period of time the service to our customers was not up to the standards they deserve. We apologise to those customers who were impacted during the period.”
The £3 million will be paid to vulnerable customers through the Citizens Advice ‘Energy Best Deal Extra’ scheme and the Plymouth Citizen Advice Bureau’s Debt Helpline.
Last October, Scottish Power agreed to pay £8.5 million to its customers after an investigation by Ofgem found it gave misleading information during sales. In March, the regulator found that the big six collectively owed more than £400 million to 3.5 million former customers who have switched supplier or moved house in the previous six years. It demanded that they make sure the money is returned.
On Thursday, Labour threw down the gauntlet to the Government on energy policy for the second time by pledging to strip any supplier of their licence to operate if they persistently mistreat their customers.
Almost a year after party leader Ed Miliband shocked the industry by announcing a two-year price freeze under a Labour government, Caroline Flint, the shadow Energy and Climate Change Secretary, announced new powers for the regulator which will enable it to revoke energy companies' licences where there are repeated instances of the most serious and deliberate breaches of their licence conditions.
EDF’s payout follow’s Ofgem’s announcement in June that a full competition investigation would be held into the big six suppliers after their retail profits quadrupled to £1.1bn in three years. The 18-month probe could result in one or more of the groups being broken up.