With well over 6 million households switching each year, it’s inevitable that not all supplier switches will go smoothly. Although the figures are improving, figures from OFGEM suggest that up to a third can see issues.
The automatic compensation triggers are:
- Switching takes longer than 15 days.
- When switched to a new supplier without requesting a change.
- Old supplier taking longer than 6 weeks to produce a final bill and issue refund.
These triggers do not apply to business energy customers or to an energy company that has gone out of business.
In the case of your energy company going out of business, protections are in place. OFGEM operates the ‘Safety Net’ process. The ‘Safety Net’ protects the credit held on customer accounts against the failing business. The supplier taking over those accounts will work alongside OFGEM to help get the credit back to the customers.
How much compensation can I get?
If a company mistakenly switches your account, it will cost your new (unwanted) supplier £30.
Incorrectly switching a customer when neither supplier can decide who is at fault will cost both £30 (£60 total).
When your new supplier fails to restore your old supply within 21 days after an incorrect switch has taken place, it will trigger a £30 payment.
In cases when two energy companies argue about who is to blame for a switch you did not ask for, it is up to them to work it out. They will have 20 days to resolve this issue or pay compensation of £30.
After notifying your supplier of a credit refund being due after the final bill, they have 10 days to pay it or will owe compensation (£30).
The switch taking more than 15 days will entitle you to £30 compensation from your new supplier.
Your previous energy supplier has 6 weeks in which to send out your final bill. Failure to do so will mean £30 compensation.
If more than one of these triggers applies to you, then you will receive more than one payment. You will receive your compensation within 10 days.
OFGEM currently has the total payments capped at £300.
How is the compensation paid?
This will depend on the type of energy account you have and how you have been making payments.
Direct debit customers will have the associated bank account credited with the compensation.
When you pay by any other method you are likely to receive a cheque.
Pay as you go meter customers will see the compensation added to the meter balance.
What if I have not received a payment?
You should contact OFGEM if you are having trouble getting your supplier to respond. These rules apply to the whole UK energy market and to every supplier operating within it.
How successful has this been?
The minimum standards laid out in this compensation scheme have been around since May 2019. After initial success, they saw a revamp in May 2020 to tighten down the rules surrounding compensation pay-outs. Over £700,000 was paid out between 2019 and 2020. A quarter of this was to customers that had been switched to a new supplier without asking for it. The vast majority however, is made up of compensation payments when there has been a late payment of a credit balance.
Are there circumstances when I won’t get compensation?
If you have owed an outstanding debt to your energy provider for over 28 days, they can block your move. If you are using a prepayment meter with over £500 of debt you will not be eligible to switch suppliers.
Other problems may include the type of meter you have installed at your property or not having the property owner’s permission to change supplier. If you are not directly responsible for paying the gas and electricity bills the bill payer will be the one to benefit.
If none of this applies to you then switching should be easy. The procedures that are in place see the vast majority of customers switch without incident. Over time they should ensure that switching becomes an even easier and smoother process. Even though these payments are automatic, you should look at previous switches as you will be eligible for issues dating back to May 2019.