Ofgem published its decision on consumer standards on 18 October 2023, setting out modifications to the standard conditions of the gas and electricity supply licences1. The changes cover how easily domestic customers can contact their supplier, how suppliers support customers who are struggling with bills, and new duties to publish customer service information1.
Under the decision, suppliers must be proactive and offer debt repayment plans at the earliest opportunity, and give due consideration to offering temporary debt repayment holidays where appropriate1. Repayment plans must be based on ability to pay, including considering temporary pausing of scheduled repayments when customers are unable to pay1. Ofgem said it updated the drafting of the licence and guidance to clarify that this condition relates to customers who are having or will have difficulty paying their energy bills only1.
The decision follows a consultation that drew over 50 responses1. Ofgem said responses were mixed: consumer representatives were generally supportive, while some suppliers were very concerned that the contact ease proposals were too prescriptive, too expensive, required further clarification and needed longer to implement1. Most suppliers were more comfortable with the proposals on supporting customers struggling with bills and on publishing customer service performance1.
Ofgem cited a fall in overall domestic consumer satisfaction with supplier customer service from 74% in Q4 2018 to 66% in Q4 20221. It also estimated a possible costs range of around £2-4 per customer per year, not including any illustrative benefits it had monetised1.
"Repayment plans must be based on ability to pay, including considering temporary pausing of scheduled repayments when customers are unable to pay"
The new licence conditions sit in SLC 27.5, by adding a new licence condition 27.5B; SLC 27.8A; and SLC 31G.3, by adding new licence conditions 31G.3A to 31G.3E1. Ofgem said it had decided to proceed with the proposed introduction of SLC 31G.3A as set out in its statutory consultation1. Suppliers will also be required to publish information on their Citizens Advice star rating performance1.
| Date | Stage |
|---|---|
| 03/05/2023 | Policy consultation published |
| 31/05/2023 | Policy consultation closed |
| 26/07/2023 | Statutory consultation published |
| 23/08/2023 | Statutory consultation closed |
| 18/10/2023 | Decision on licence changes |
Source: Ofgem, Consumer standards - Decision1
Why it matters for households
For a household behind on bills, the practical change is in how a repayment plan is set. The decision requires the plan to reflect what the customer can pay, and allows for repayments to be paused temporarily where they cannot1. That bears directly on energy debt and repayment plans, because a plan set above a household's means is difficult to sustain and can lead back to arrears.
The contact ease requirements also matter where a household needs to reach a supplier to discuss a plan. Ofgem's guidance says contact should be available via methods that meet customer needs, at times that meet customer needs, free for customers struggling to pay, and should prioritise vulnerable customers who need immediate support, or their representatives acting on their behalf1. Ofgem also flagged suppliers taking significantly or consistently longer than specific time periods to respond to queries, giving the example of 5 minutes on average each month to answer phone calls1.
Publishing Citizens Advice star ratings gives households a visible measure of supplier performance, which sits alongside the wider question of how energy suppliers support household energy independence. The rules are made by Ofgem, the energy regulator, and apply to domestic supply licences.
What happens next
Ofgem said its new rules take effect from 8 November 2023, with the Code requirements remaining in place until that date1. The licence changes set out in the modification notices published alongside the decision take effect from 14 December 2023, which Ofgem described as 56 days after the decision is published1. Ofgem said the majority of its licence conditions will go live from 14 December 20231.
One element is not yet in force. Ofgem said it is keen for a voluntary industry solution to come forward in a timely manner, and that this licence requirement will only be brought into effect after consultation and with at least two months' notice1. Ofgem also said all suppliers will need to have regard to its guidance document1.
Sources1 cited
- Consumer standards - Decision, ofgem.gov.uk