Affected customers will receive payouts worth £271 on average after some waited 18 months for grievances to be addressed.
Energy firm Ovo has agreed to pay £2.4 million in compensation and redress payments over the way it’s handled customer complaints.
Regulator Ofgem found that some of the 1,395 OVO customers affected were forced to wait up to 18 months for their grievances to be addressed.
It also discovered delays when it came to Ovo carrying out the Energy Ombudsman’s decisions after complaints were progressed.
Jacqui Gehrmann, Ofgem’s deputy director of retail compliance, said energy was an essential service and consumers can be caused a lot of distress if something goes wrong.
“In this case, OVO failed to adequately protect and respond to their customers when it was needed most," she said.
"This is not acceptable.
"Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that OVO’s performance was falling below acceptable standards."
Who will get compensation?
Ovo will pay £378,512 in compensation directly to affected customers and another £2 million to the Energy Industry Voluntary Redress Scheme.
This means an average payout of £271 per person.
Affected customers will be contacted directly by Ovo and don’t need to take any further action.
Ofgem began investigating Ovo last June after concerns were raised by Citizens Advice Scotland’s Extra Help Unit over the time taken to address complaints and action decisions.
The regulator identified key areas of improvement, including upgrading its complaint handling system, and asked OVO to provide a plan on how issues would be resolved.
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Letter of apology
In a statement, Ovo insisted it wanted to give its customers “the best experience we can” at every turn.
“However, we recognise that a particular group of our customers in 2023 waited longer than we’d like for a resolution and were overdue a response from us, so we’ve sent them a letter of apology and compensation to help.”
Natasha Gilmour, head of operational support at Citizens Advice Scotland, explained that the Extra Help Unit supports vulnerable consumers experiencing difficulties with their energy suppliers.
She said: “While it’s rare for a compliance case to be necessary to resolve such issues, it is reassuring to see how OVO has responded to the investigation by Ofgem, and we are satisfied that the new practices implemented are ensuring good and timely outcomes for our clients.”
The Energy Ombudsman commented: “We welcome today’s news that following compliance engagement between Ofgem and OVO, consumers will be compensated for OVO’s failures to implement the remedies set by the Energy Ombudsman.
Enforcement action
Ofgem has collected more than £400 million in payments since 2020 through its compliance and enforcement activities, which has been used to help households struggling with their bills.
In 2023 alone, it recovered £77.2 million in fines, customer refunds, compensation and alternative action payments. This figure was up £50.5 million on the previous year.
Meanwhile, the Energy Redress Fund provides money to charities to deliver energy-related projects that support customers in vulnerable situations.
It also helps deliver benefits to customers who were affected by the specific issue that triggered the redress payment.