Energy firms to pay you up to £300 automatic compensation if switching goes wrong from today
HOUSEHOLDS will automatically receive up to £300 of compensation if something goes wrong when switching suppliers. The new rules come in today – but MoneySavingExpert.com founder Martin Lewis says they don’t go far enough to help consumers. Switching suppliers could save you £447 a year, according to comparison website uSwitch. That’s why a record number […]
HOUSEHOLDS will automatically receive up to £300 of compensation if something goes wrong when switching suppliers.
The new rules come in today – but MoneySavingExpert.com founder Martin Lewis says they don’t go far enough to help consumers.
Switching suppliers could save you £447 a year, according to comparison website uSwitch.
That’s why a record number of 5.8million households switched energy firms last year, according to trade body Energy UK.
But Ofgem estimates that switching went wrong for more than 1.8million of them – about a third.
From today, customers will automatically receive compensation if they have been mistakenly switched to a different supplier.
They will also be compensated if suppliers are late in refunding credit balances when customers have switched away.
The minimum amount of compensation customers will receive is £30.
But they could receive up to nine times more – up to a max of £300 – if several things go wrong.
We’ve broken down below how much customers could get depending on the issues they face when switching.
How much compensation will customers receive?
HERE is a breakdown of the compensation customers could receive if something goes wrong during the switching process:
Mistaken switches
- When a supplier doesn’t acknowledge the problem: £30. If a supplier you have contacted doesn’t send you a letter pledging to switch you back to your old firm within 20 days of you flagging the mistaken switch, then you will receive compensation automatically.
- When suppliers don’t identify the problem: Up to £60. If your old and new suppliers don’t agree that a mistaken switch has occurred within 20 days of you flagging the issue, then you could receive £30 from each of them.
- When a supplier doesn’t switch you back: £30. You will receive compensation from your original supplier if you are not switched back within 21 working days.
- When your credit balance isn’t refunded: £30. Your old supplier has to refund the credit left on your balance within 10 days of receiving your final bill or you will receive compensation.
- When you don’t receive your automatic compensation: £30. If a supplier fails to pay you any automatic compensation you’re entitled to within 10 days of any breach of the rules, you are entitled to another £30 for each delayed payment.
Total: £300 (if everything went wrong and suppliers were late with each compensatory payment)
If everything went wrong, the maximum amount of compensation a customer could receive is £150.
For this to happen, you would need to be mistakenly switched and also receive a credit balance refund late.
But you could also receive an extra £30 per failure if you don’t receive the compensation you’re owed within 10 working days.
Unfortunately, Ofgem told The Sun that you won’t receive extra money if the supplier is more than 10 days late.
For example, if a firm is 20, 30 or even 40 days late in paying you compensation, you would still only receive £30 per delayed payment.
But the regulator says if suppliers keep being late with compensatory payments, it could force firms to pay £30 for every 10 days that they’re late.
How compensation is paid is up to the supplier. It could be a bank or credit card transfer, or the firm could send a cheque in the post.
The regulator hopes the new rules will encourage more customers to switch.
It should also help decrease the number of switching problems as suppliers will want to avoid paying out.
Housholds are still not yet entitled to automatic compensation for delayed switches, and for late final bills from old suppliers.
The regulator said it will introduce this separately later this year – but that’s not soon enough for Martin Lewis.
Exceptions to the automatic compensation rules
THERE are still some ways firms could wriggle out of paying you:
- If the supplier disputes that it owes you compensation: If a firm is arguing that it doesn’t owe you money, you could take your case to the Energy Ombudsman, which would decide.
- If you don’t want to take action: If you’re happy with your new supplier and want to stay, even if it was a mistake, you won’t receive compensation.
- If there’s no strong case: The supplier could dismiss a complaint if there’s no evidence.
- If there’s been a crime: If a customer has stolen gas or electricity, then they won’t receive compensation.
The founder of MoneySavingExpert.com said: “The new rules are progress, but there is still a big hole.
“While telling firms they must give credit within 10 days of the final bill, Ofgem hasn’t told them how quickly the final bill must be sent, and we know in some cases it can be a year after customers have left.
“This is farcical, and Ofgem must urgently address this, or providers have a very easy loophole to continue delaying paying people money back, and depriving people of their hard earned cash.”
To make sure energy firms stick to the new rules, suppliers will have to report back to Ofgem which says it will check to make sure they are compensating customers.
Rob Salter-Church from Ofgem said: “When a switch goes wrong, it can cause inconvenience, and in some cases, real worry and stress for those affected.
“Automatic compensation payments from May 1, and additional payments this year, should serve as an incentive for suppliers to raise their game and get switches right first time.”
Before now, there was a voluntary scheme where the big six energy companies committed to pay £20 to customers who had been switched by mistake.
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More on Money
The new rules come as it’s been revealed that 12million homes are owed £200 from their energy supplier.
Meanwhile, MoneySavingExpert.com founder Martin Lewis reveals how to claim back £100s from your energy provider.
Plus, here’s how to compare and cut your gas and electricity bills by more than £300 a year.
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