Energy switchers to receive compensation for delayed refunds

Gas and electricity customers are set to automatically receive compensation if their supplier fails to hand back their final credit balance within 10 working days.

Under the new Ofgem rules, which started on 1 May, customers will also be entitled to compensation of up to £120 for so-called “erroneous switches”, where they are mistakenly switched to the wrong supplier.

Both the gaining and losing suppliers are subject to these new guaranteed standards, Ofgem says.

Customers will be entitled to a £30 payment if their previous supplier is late in refunding them their credit balance after they have switched.

Suppliers must refund any money owed within two weeks or 10 working days of a final bill being issued, or pay the compensation.

It is thought this will benefit around 200,000 customers a year, whose supplier is slow to hand back credit balances, which can easily amount to several hundred pounds.

However, Ofgem decided not to introduce automatic compensation if a final bill is more than six weeks late – something that consumer groups have been demanding.

Rob Salter-Church, director at Ofgem, said: “When a switch goes wrong, it can cause inconvenience, and in some cases, real worry and stress for those affected. Automatic compensation payments should serve as an incentive for suppliers to raise their game and get switches right first time.”

A similar but different scheme for broadband and phone customers started on 1 April. Compensation of £8 a day is payable if your landline or broadband is not fixed quickly enough or your new landline or broadband service is not up and running on the day promised.

Meanwhile, £25 is paid if an engineer doesn’t arrive for an appointment as scheduled. More than 90% of broadband and landline customers, including households using BT, Virgin Media and TalkTalk services, are included.