Npower to pay £26m for 'chaotic' billing and complaints handling
Thousands of npower customers will receive a share of £26 million – the amount the energy provider has been fined for causing widespread billing and complaints handling problems.
Between September 2013 and December 2014, over two million complaints were made about npower – the majority of which were about late or inaccurate bills. Many of the problems surfaced as a result of npower introducing a new IT system in 2011.
As a result of these failures, energy regulator Ofgem has today announced that the big six provider must pay £26 million, which will be split between the most affected customers and charitable projects that help vulnerable consumers.
Ofgem has also agreed targets with npower for it to further improve its billing and complaints handling by the end of June 2016. If npower fails to meet these, it will be forced to stop proactive sales activity and advertising until they are met.
Dermot Nolan, Ofgem chief executive, says: “npower failed its customers. Not only has its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable.”
How do I know if I'm due redress?
npower says it will identify and repay all potential customers, who may have been back-billed incorrectly from July 2010 to date, including those who have since switched provider.
It says the number of customers who will receive payments is under 100,000, and adds that they’ll get around £100 back on average.
npower says affected customers will be contacted directly by March 2016, while it also plans to pay people by this date. The majority of payments will be made via the means customers pay, for example, directly into bank accounts for those who pay by direct debit.
What exactly did npower do wrong?
Ofgem found npower guilty of the following:
• Late bills: Between September 2013 and December 2014, npower issued over 500,000 late bills.
• Inaccurate bills: Some affected customers also received inaccurate bills with little or no detail on how these were calculated.
• Poor complaints handling: npower often failed to resolve complaints promptly and pursued debts that were in dispute, which Ofgem says caused “significant distress and worry for many”. For several years, npower also recorded a “significant number” of complaints incorrectly, leading to unresolved complaints being logged as resolved and multiple records created for one issue. This created follow-up problems for customers.
• Customers not informed of their rights. npower did not refer all customers to its complaint handling procedures and in some cases, failed to advise them that they could take their complaint to the Energy Ombudsman if unresolved after eight weeks.
‘We are very sorry'
Simon Stacey, managing director of domestic markets at npower, says: “The last few years, since we changed the systems that support our domestic business, have been very disappointing for our customers - and for npower.
“We are very sorry about what has happened and that is why we have agreed this significant package of customer redress.”
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.