Citizens Advice response to DESNZ’s consultation on “Fairer, Faster Redress in the Energy Market”
Citizens Advice welcomes the opportunity to respond to the Department for Energy Security and Net Zero’s proposals to change the Energy Ombudsman’s (EO) remit and enforcement powers. As the statutory advocate for energy consumers, we have unique insight into consumer needs and how they can achieve good outcomes during the complaints process. Our service helps more than 250,000 people each year with energy issues, giving us a clear view of the challenges they face, many of which are complex and interconnected. We work closely with the EO, as well as other organisations that form part of the complaints handling framework, and recognise the vital role they play in helping consumers enforce their rights. Our primary concern across these proposals, including shorter wait times and pro-active EO outreach, is the impact on consumer outcomes and the risk that people will not access the most appropriate service or support at the right time. If cases are moved on too quickly, without enough assessment or understanding of the wider issues a household may be facing, the support offered may not address their underlying problems and could lead to harmful outcomes. We recognise that the current eight week period can be frustrating and can delay redress in some cases, while the digitalisation of services in the energy sector should mean that many complaints can be resolved more quickly than was possible in the past. It is right to consider how all parts of the current complaint handling framework are delivered in a way that incentivises fewer complaints, improves complaint outcomes and delivers value for money. However, a substantial reduction in the wait period should be tested with consumers and suppliers first, including an assessment of costs, to ensure it genuinely achieves these aims. We particularly urge the government to pilot any wait period under six weeks before proceeding. We’re concerned that the proposed reduction to four weeks could lead to worse outcomes, especially for complex cases or those 3 involving consumers in vulnerable circumstances, where other advice and support services could provide better support. The EO currently takes an average 6 weeks to resolve complaints, and costs over £300 per case for those requiring a full decision. If reforms lead to over-reliance on Alternative Dispute Resolutions (ADR), end-to-end complaint resolution times could increase and costs could rise, especially if cases reach the EO before suppliers have had the chance to resolve them, or before advice and support services could help achieve a better outcome. For some problems it can be necessary for suppliers to take longer than four weeks to resolve them, particularly those involving other organisations, such as smart meter problems involving the DCC. As energy services become more integrated with low-carbon technologies, more cases may require longer resolution time due to complexity around problem diagnosis and accountability. Providing carve-outs from the core wait period for certain types of complaints could address this risk, but would create complexity for consumers, particularly if their complaint relates to multiple problems which have different wait periods. Introducing penalties and consumer compensation where suppliers do not implement decisions on time is a constructive step forward. The standards for compensation have recently increased, for example through the new commitment to expand GSOPs for customers facing delays for smart meter issues. However, any move toward putting the EO on a formal statutory footing should be accompanied by greater oversight of the EO to ensure appropriate accountability and efficiency. As the energy market expands through the transition to Net Zero, the EO’s remit (as well those of statutory advice providers) is likely to need expansion to cover new services. We also encourage a more joined-up approach to ADR across sectors. Some energy consumers, such as those on heat networks, currently fall between fragmented housing and energy redress systems. This problem may grow as more services span multiple sectors, including those that combine energy, finance and low-carbon technologies. Reforms must also reflect the wider complaints journey and the needs of people in vulnerable circumstances. Statutory advice and support services already play a key role in unlocking better outcomes and generally operate at a lower cost per case than the EO. We are concerned that automatic sharing of cases for pro-active EO outreach could incentivise suppliers to record fewer complaints or to close complaints prematurely, particularly if consumers are pushed to provide more information than they are able to manage without support. These risks must be considered to avoid unintended consequences. Pro-active outreach by the EO could prevent a more timely or optimal solution, where tier 1 or tier 2 advice could be the more appropriate route. For households with complex needs, the time taken to resolve a case is often less important than confidence that they are being properly supported and will get the best outcome. Many cannot engage at the pace suppliers or the EO may expect. Shorter timelines must not result in consumers feeling less supported or facing burdens they cannot manage. There is also a risk that the EO could make binding decisions too early, before essential support has been provided, which could result in the wrong outcome. Where consumers are at risk of debt or disconnection, they may miss out on the additional that Tier 2 services and CEDA can provide. Considering the severity of harms that may arise should the outlined reforms not be implemented properly, there should be careful consideration before applying reforms to the heat network market at this time. While there are benefits to aligning any approach taken in the heat networks market to mains gas and electricity, consideration should be taken to the unique challenges facing heat network consumers. Automatic referrals and quick solutions could have similar harmful effects that we are concerned about with other types of consumer cases. Our previous research has found that heat network complaints can be complex and hard to resolve, as it can often involve multiple parties with different responsibilities. We welcome DESNZ recognition of the need for clear pathways for consumers to access the right support at the right time. We will continue to work with DESNZ, the Energy Ombudsman and other stakeholders to ensure that any changes support better outcomes for all energy consumers.