Shapps slams Ofgem for being in thrall to energy firms
Ofgem is in the crosshairs of Business Secretary Grant Shapps, who has accused the industry watchdog of having “the wool pulled over their eyes” by the suppliers they are supposed to be regulating.
He told Sophy Ridge on Sky News yesterday that Ofgem had become too trusting of energy firms.
Shapps said: “Unfortunately, what the regulator was doing was going back to the energy company and saying, ‘Are you following all the rules?’, and the energy company said, ‘Oh, yes, yes, yes, don’t worry’.”
He has now called on Ofgem to go directly to customers and charities over potential malpractice issues in future industry reviews, rather than relying solely on submissions from suppliers.
This includes the upcoming market compliance review into the forced fitting of prepayment meters.
Prepayment meters are at the centre of a growing industry controversy, after The Times found that Centrica owner British Gas had been hiring a third-party agency Arvato Financial Solutions to enforce prepayment installations.
The group was reportedly breaking into vulnerable people’s homes to fit the meters that require advance payment for heating.
Shapps revealed he was “appalled” at the behaviour of suppliers, which he urged to “refocus their on their customers.
He has given energy companies a deadline of tomorrow to report back on what remedial action they will be taking, including compensation, in response to force-fitting pre-payment meters on vulnerable customers.
However, Shapps also took Ofgem to task for failing to regulate forced prepayment meter installations effectively.
The Business Secretary noted that multiple industry reviews by Ofgem of the services provided by energy suppliers failed to identify British Gas’ practices – despite 33,000 complaints about prepayment meter installations to Ofgem from customers last year.
He said: “They need to also listen to customers to make sure this treatment of vulnerable consumers doesn’t happen again.”
Ofgem scrambles to respond to industry scandal
Ofgem revealed that it shared Shapps’ “shock” at British Gas’ behaviour, and has launched an investigation into the company.
It also conceded that its industry reviews were potentially failing to depict the experience of customers accurately.
A spokesperson said: “What is clear, as the Secretary of State has laid out, is that the picture presented by companies may not accurately reflect what is experienced by customers on the ground.
“Therefore, further reviews will cross examine what we have had reported to us with direct reports from customers and wider stakeholders, and potentially those involved in delivery of services. This will include finding new ways for customers to highlight their concerns to Ofgem.”
The latest scandal follows Shapps writing to energy firms last month, asking them to voluntarily stop the practice of forced prepayment meters – although he stopped short of threatening changes to the law amid concerns over further bailiff action from energy firms instead.
Unfortunately, what the regulator was doing was going back to the energy company and saying, ‘Are you following all the rules?’, and the energy company said, ‘Oh, yes, yes, yes, don’t worry’.”
Grant Shapps, Business Secretary, on Ofgem’s performance
Suppliers need to apply to a court for a warrant to break into a customer’s home and install a prepayment meter if debts have built up.
They are also required to have exhausted all other options before doing so, and should not use that as a solution for vulnerable customers, such as elderly people and families with young children.
Last week Ofgem ordered all domestic energy companies to suspend the system of forcibly installing prepayment meters – as first reported by City PM
Some companies such as Ovo Energy had ditched the use of forced prepayment meters as a matter of company policy prior to the scandal, while Octopus Energy has only installed 12 prepayment meters via court warrant in its eight years of operating.