The Uk’s gas and electricity industry regulator Ofgem has fined provider Ofgem £26m because they failed to treat customers ‘fairly’. The regulator has also warned that the company could be barred from selling its services if it has failed to improve by the end of June.
The £26 million fine is currently the largest to be given to one of the big six companies. The Chief Executive of Ofgem said that Npower’s penalty should send a ‘strong message’ across the industry, given that the provider controls around 10 per cent of the market. Dermot Nolan said it’s very important that suppliers follow industry principles to ensure customers are treated fairly at all times, acting quickly and efficiently in order to provide great customer service.
Npower is owned by a German company and is the latest in a line of utility providers to be reprimanded by Ofgem. Just last month, the regulator fined Eon £7m for failing to provide it’s business customers with advanced electricity meters. An investigation is also currently ongoing into Scottish Power, who were subject to a ban on selling earlier this year as a result of customer complaints.
Earlier this year, the Competition Markets Authority called for a cap on energy prices after it found that suppliers had been overcharging households by around £1.2 billion a year. The Prime Minister David Cameron’s office said back in July that the Government was ‘preparing to consider’ a temporary cap on energy bills.
Npower’s problems began back in 2o11 when they installed a new IT system. The report from Ofgem found that between September 2013 and December 2014, the company issued over 500,000 late bills. Some customers also received inaccurate bills with no details of how they could have been calculated. During this period, Npower received around 2 million complaints, but did not deal with them in a timely manner. Instead, the company chased debts which were in dispute, failing to stick to its own commitments when it came to managing billing.
Npower’s managing director said that the company apologised for its shortcomings and pledged to improve customer service. The spokesperson agreed that the last few years had been ‘disappointing’ for customers, but the company has since reduced customer complaints by 70 per cent since the start of the year.
Now, Npower must meet more targets set by Ofcom by the 30th of June 2016 if it is to continue selling. The targets including reducing the amount of late invoices from 46,000 to 15,000 over a six month period. Npower must also cut the amount of complaints over a 56 day period from 9,000 to 4,500. Ofgem have also demanded that the flow of new complaints leading up to new investigations by the Ombudsman to be reduced from 1000 a month to 600. Lastly, Npower must identify and repay all customers who may have been billed incorrectly since 2010.
Back in August, the Germany company who own Npower voted to replace the energy provider’s management after the issues with billing lead to them losing over 300,000 British customers. The UK division experienced a 60% fall in profits during the first half of the year.