Energy firms pay out more than £10m in fines for rule-breaking

Households and regulators were paid out more than £10 million in compensation by energy firms this year, new data from watchdog Ofgem reveals.

Enforcement action saw £4 million handed to customers in compensation, £4.6 million to Ofgem’s Voluntary Redress Fund and a further £1.5 million to the regulator in additional payments.

The data, compiled by auto-switching service Switchcraft, also shows Npower and SSE were censured twice during the financial year, with British Gas and EDF getting slapped wrists once each.

A series of small suppliers were also in trouble, including Solarplicity, Green Star Energy, Extra Energy, and Eversmart Energy.

Three actions, covering five infringements, were terminated after the supplier went bust – including three against Economy Energy, and one each for Spark and Iresa.

Treating customers unfairly, incorrect charges, switching issues and payment failures to the regulator were the biggest causes for investigations.

The last 12 months have been one of the busiest periods for Ofgem, with several smaller suppliers going bust, the introduction of the price cap and the collapse of the merger between SSE and Npower.

Ofgem also issued a High Court injunction during the year – last December – against Npower for the supplier’s failure to comply with the regulator’s new group switching programme.

In total, 15 cases were completed in April 2018 to March 2019, with seven recording “no formal finding of breach”.

Six were closed through “alternative action” – with compensation payouts – and two were ended with action and formal findings of breaches.

There remain 12 cases still under investigation, with some dating back to 2016 and 2017.

Alex Dickson, head of research at Switchcraft, said: “It’s great to see Ofgem on the front foot when it comes to enforcement actions against suppliers.

“However, we should be concerned that in at least five cases investigations ended due to a supplier going bust.

“If complaints are raised they need to be resolved on a timely basis. It’s not fair that suppliers escape payment if they collapse before enforcement action takes place – these costs end up being spread across all UK consumers.”