The power regulator has ordered Octopus Power to pay £1.5m in refunds and compensation, after an investigation discovered hundreds of errors on prepayment meter payments.
An investigation by Ofgem discovered Octopus did not concern remaining payments to 34,000 prepayment clients who transferred to a different provider or terminated their contract inside the required six-week interval between 2014 and October 2023.
Octopus has agreed to pay £1.25m in compensation to affected clients, and refund £231,000 in credit score that was remaining on accounts after they had been closed. The common sum paid for every affected buyer was £43, Ofgem mentioned.
Ben Martin, the director for shopper safety and competitors at Ofgem, mentioned it was essential that clients obtain remaining payments according to its guidelines “so they’re conscious of any credit score remaining on their accounts and may reclaim it”.
“That is notably essential for prepayment meter clients who usually tend to be in monetary problem,” he mentioned. “We are going to proceed to carefully monitor compliance with our billing guidelines, and drive enhancements within the sector so clients can anticipate the very best requirements of service from their power provider.”
The regulator first recognized the issue after one other power supplier, E.ON Subsequent, self-reported the identical error to Ofgem.
Octopus mentioned the regulator had “spent two years investigating an alleged concern with prepayment meter payments that had zero buyer complaints”.
The corporate – Britain’s largest family power provider – disputed the concept that prepayment clients should obtain a remaining invoice when shifting out, arguing it’s “unattainable to implement typically”.
Octopus mentioned 60% of its prepayment clients don’t notify the corporate after they transfer and plenty of power suppliers “depend on sluggish and unreliable conventional prepayment trade programs for remaining billing”. Octopus added that it solely has checking account particulars for 10% of prepay clients, whereas 70% of refund cheques go uncashed due to a scarcity of forwarding addresses.
Octopus mentioned that as an alternative of following Ofgem’s remaining invoice mandate, it costs its prepay clients about £70 under the value cap.
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The power supplier claimed that beneath Ofgem’s guidelines, solely about 16% of prepay clients would really obtain a remaining assertion and any due credit score refund.
Rachel Fletcher, the director of economics and regulation at Octopus Power, mentioned: “Octopus has at all times been targeted on doing the correct factor for purchasers and pondering outdoors the field to ship good outcomes for purchasers regardless of imperfect trade programs and knowledge.
“With power prices hovering, we’d wish to see Ofgem put individuals over insurance policies. Folks need decrease payments. We’d wish to see Ofgem focusing its efforts on delivering that.”
