Scottish Power could be forced to suspend its sales operation if it does not sort out failings in customer service that have dogged the company for nearly a year, the energy regulator has announced.
The Glasgow-based supplier of gas and electricity to around 5.3m homes has been the subject of 11 months of complaints after it introduced a new £200m billing system. Customers have reported overdue bills and long waits to get through to staff by phone, who then appear powerless to resolve basic problems.
Ofgem has launched a formal investigation and warned that if it finds evidence of gross negligence at the company it has the power to fine it up to 10% of turnover – the company’s revenues in 2013 were £8.2bn.
The company has been made to commit to a series of strict call handling resolution targets and could face having to suspend sales operations if they are not met.
Ofgem said Scottish Power must significantly improve the speed of answering customer calls by the end of January and publish weekly progress reports on call waiting times. Waits of half an hour have been commonplace, according to customers.
The company has also been ordered to reduce the number of overdue bills from the current rate of 75,000 to 30,000 by the end of December. It must also completely remove the backlog for acting on ombudsman decisions for individual complaints by the end of this month.
Sarah Harrison, the senior partner in charge of enforcement at Ofgem, said: “Scottish Power’s customers are experiencing unacceptably long call waiting times and a drastic drop in overall customer satisfaction. In a properly functioning market we would expect companies to compete keenly on service.
“The need for our intervention here is yet more evidence that the energy market is not working for consumers. The investigation we launched today is the third time we have used our new standards of conduct to make suppliers treat consumers fairly.”
Neil Clitheroe, chief executive of Scottish Power retail and generation, said he apologised “unreservedly” and pledged to hit the targets.
“It is simply not the high service standard long associated with Scottish Power, nor the customer service standards industry regulator Ofgem expects. We are determined to put it right,” Clitheroe said. “We are working hard to make it easier for our customers to contact us and to answer every call, email and complaint as soon as we can. We are increasing our staff by a further 250 people on top of the additional 450 people already recruited earlier this year to manage all customer contact and complaints as quickly as possible.”
Scottish Power is just the latest energy firm to see its customers services seriously deteriorate following the introduction of a new billing system. British Gas, EDF and most recently Npower all experienced similar failures. Npower is currently being investigated by Ofgem for almost identical problems but on a bigger scale.
Research by the comparison website uSwitch found 16% of Scottish Power’s customers had been sent an incorrect bill in the past year. Across the industry, more than 3 million gas and electricity consumers have been overcharged by their supplier in the last year due to errors on their bills to the tune of an average £78 each.
Complaints to Ombudsman Services reached 5,011 in October – the second highest on record - and a 9% increase on the September figure.
