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Ofgem unveils standards of conduct for energy suppliers

‘The standards of conduct … require suppliers to go through a culture change in the way they treat consumers’

cold winter heater and mugEnergy industry regulator Ofgem has unveiled its new standards of conduct for suppliers, which it says are the first steps to creating a “simpler, clearer, fairer” energy market.

From this week, Ofgem has introduced new enforceable rules that represent the first stage of market reforms to ensure that energy suppliers are treating consumers fairly.

The standards themselves will cover all communication between suppliers and customers, ranging from the way in which new energy deals are marketed to the way companies deal with any complaints about energy bills, tariffs or service levels.

Behaviour, information and process

The rules cover three main areas – behaviour, information and process – which apply to every supplier, as well as any organisations that represent them, including brokers and third party intermediaries.

In terms of behaviour, suppliers are required to behave and carry out any actions in a “fair, honest, transparent, appropriate and professional manner” at all times, or risk sanctions.

Similarly, in regards to information, energy firms must provide written or oral information that is not only complete, accurate and not misleading, but also communicated in plain and intelligible language, and fair in both its content and the way it is presented.

Finally, the process element ensures that suppliers make it easy for the consumer to contact them, act “promptly and courteously” to rectify mistakes, and ensure that all customer service arrangements and processes are complete and transparent.

Enforcing the standards

In order to police the new standards, Ofgem has asked energy suppliers to publish statements each year that clearly show what actions they are taking to treat consumers fairly.

Although the standards will help to boost fairness and transparency in the market, the overall package of reforms will mean suppliers must go further, explained Andrew Wright, Ofgem chief executive:

“The standards of conduct we have introduced require suppliers to go through a culture change in the way they treat consumers,” he explained.

“They have to make sure they are embedding simplicity, clarity and fairness into all their dealings with consumers to tackle the lack of trust that has blighted the market. The standards of conduct will also enhance consumer protection as they are backed by Ofgem’s power to levy fines.”

Shaking up the market

The new standards will form part of the biggest ever shake-up of the energy market and the way in which suppliers interact with consumers.

By the end of this year, energy suppliers will be restricted to offering up to four core tariffs per fuel, all of which will have a standing charge and a single unit rate, though dual fuel and online account management discounts will stay in place.

Furthermore, all customers on existing, expensive “dead tariffs” that are no longer marketed will have to be automatically transferred onto the cheapest variable rate by the end of June 2014.

The rules will be supplemented by a ban on increasing prices on fixed term deals or making other changes to fixed term tariffs, and on rolling forward household customers onto fixed term contracts without them consenting beforehand – a measure that will come into effect from October 22nd this year.

Finally, energy suppliers will be obliged to give all consumers personalised information on the cheapest tariff they offer in a simplified, engaging and personalised manner, while a new Tariff Comparison Rate will be established to assist customers in comparing tariffs and ensure they get the best deal possible, all of which will be enforced before the end of March next year.

Together, Ofgem hopes the new standards, requirements and measures will ensure all consumers are alerted to the best possible offers pertinent to them and help to collectively lower the nation’s energy bills.

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