Ofgem plans overhaul of customer service standards

Energy regulator Ofgem has signalled it is to give firms more “flexibility” in achieving customer service standards in order to create a more “agile” sector.

It said it was exploring a shift to “outcomes-based regulation” of customer service, with plans to streamline “overly prescriptive rules” and empower suppliers to deliver better outcomes for consumers.

Ofgem said the approach set broad goals for what should be achieved, rather than prescribing exactly how to achieve them.

It would allow suppliers more flexibility while ensuring they met key standards and results.

Suppliers “will be expected to ensure that every customer interaction leads to a positive result”, it said.

This could include suppliers investigating and resolving complaints fairly, promptly, and through channels that suited the customer.

Ofgem said it was acting on feedback from suppliers and consumer groups that regulation has become too complicated due to a growing number of rules and requirements that “limit flexibility and innovation”.

Ofgem also said it was carrying out its largest review of the supplier Guaranteed Standards of Performance, which set minimum standards of performance for all suppliers and demands they pay £40 automatic compensation to affected consumers if they fail to meet them.

The regulator said it was considering where the guaranteed standards may be more appropriate or effective than prescriptive supply licence conditions.

It said it was aiming for a “clear and simple regulatory framework that achieves the best possible outcomes for energy consumers”.

It is now seeking feedback from the industry on its proposals.

Customer satisfaction

Ofgem director general of markets Tim Jarvis said: “Average customer satisfaction in the energy sector is at a record high. But maintaining momentum and ensuring standards are high across the market is crucial as the system evolves toward clean, home-grown energy.

“We need to ensure our regulatory framework is fit for the future – one that embraces competition, enables innovation, and supports growth while protecting consumers.

“By working with the industry and consumer groups on our plans to introduce greater use of outcomes-based regulation and explore more effective Guaranteed Standards of Performance, we aim to drive innovation and deliver consistently better results for energy consumers.

“Our goal is to strike the right balance: protecting consumers while reducing the regulatory burden on suppliers.”