The Energy Ombudsman's Compensation System

MattMattMattUK

Stuart_ said:

Dolor said:

Stuart_ said:

Even if one doesn't assign a specific monetary value to their time, the principle of receiving compensation for the inconvenience and ŷeffort spent on sorting a supplier's mistake still stands. It's not just about attaching a monetary value to the time spent; it's more about the respect, inconvenience, and even the emotional distress one might have experienced due to the issue.

Even if you personally feel that your time has no financial value, you are entitled to respect and fair treatment from the companies with which you do business. Receiving compensation when their mistakes cause inconvenience is part of that respect and fair treatment.

While I understand some concerns over fostering a compensation culture, it's crucial to acknowledge that the £50 average compensation isn't a lavish payout by any means. In fact, considering the time, effort, and stress a consumer might experience while trying to resolve a complex issue with an energy supplier, £50 may not even come close to adequately compensating them for their troubles.

Even if we were to see a tenfold increase in the average compensation, bringing it to £500, it still wouldn't be approaching a level that could reasonably be described as promoting an exaggerated compensation culture. Such an amount would be more commensurate with the inconvenience, time, and effort spent, especially in cases where the supplier has made significant errors or provided poor service over a sustained period.

Moreover, a more substantial potential for compensation could serve as a stronger incentive for companies to ensure their services are provided efficiently and effectively, thus reducing the number of complaints and compensation claims in the first place. It's about striking a balance between accountability, consumer protection, and avoiding a culture of excessive compensation claims.

Suppliers already pay EOS a fee of over £400 for each case that is referred to them. If EOS started offering significant compensation then some people would ‘manufacture’ complaints hoping that they might get some compensation for their time and trouble. To a degree, this happens already and often a supplier will just offer a small goodwill payment to keep a customer happy ( saving on staff time etc). If EOS is going to offer more in the way of compensation, then there is an argument that customers should pay an EOS fee to consider a complaint which is refundable only if the complaint is upheld.

I know that you are on a personal mission. Might your time be better spent emailing your MP or getting support for a Government Petition if you feel so strongly on these issues?

I understand your viewpoint, and I certainly agree that we don't want a system that encourages fraudulent or unfounded complaints. However, the current system appears to favor the energy companies over the consumer in many instances, which is problematic.

The current system needs improvement, but in many ways it is already quite punitive on suppliers.

Stuart_ said:

While it's true that suppliers pay a fee to the Energy Ombudsman for each case, it's also the case that these fees represent a tiny fraction of the overall revenue of energy companies

The fees that they pay are £400 or more, so each time someone complaints to the EOS then that wipes out the entire annual profit on eight or more customers, that is before and compensation is paid out and if relevant fines are issued later on by the regulator. It also ignores the costs to the supplier in terms of staff and resources needed to manage the process. 

Stuart_ said:
and yet the stress, inconvenience, and financial impact on consumers can be significant. 

We often see here that most of the stress is something which people bring upon themselves, the issues can and are almost always resolved when one follows the correct procedure, raise a complaint, state the issues factually, it almost always gets things resolved, but many people spend hours ringing up suppliers and ranting at customer service staff who are unable to help, or complaining at a lack of response within a very short timeframe, sending multiple emails on the same complaint day after day. There are of course some absolutely awful customer service issues with suppliers, but a formal complaint and then the ombudsman is the way to go, it takes relatively little time and there should not be a negative financial impact on customers. There seem to be far too many situations where people claim something is distressing and that must mean they are entitled to compensation, the reality is that they should not loose out, but neither should they be enriched. 

Stuart_ said:
I believe it's important that energy companies are held accountable for their service levels, and this includes adequate compensation when they fall short.

As mentioned above by others, it already costs them whether the customer's complaint is legitimate or frivolous, both in financial and resource terms. On top of that those that have failings in specific areas get fined, it seems on a semi-regular basis.

Stuart_ said:

As for your suggestion to take my concerns to my MP or start a government petition, that's something I have considered and might pursue. But forums like this are also important to raise awareness and prompt discussion on these issues. In the end, we're all consumers who are impacted by the actions (or inaction) of energy companies and the Energy Ombudsman, so it's in our collective interest to ensure the system is as fair and transparent as possible.

The thing is that whilst there are some very vocal individuals, for most people, upwards of 99.99% of people, everything works correctly. It is also interesting to see that a lot of complaints do fail and we see it on here, people complaining about suppliers having done something wrong, only for it to become obvious that either the customer was doing something wrong, or they were just failing to understand what the supplier was correctly doing. 

I agree that the system should be fair and transparent, I just to not see that part of fairness or transparency is handing out chunks of "compensation" to people who complain.

Stuart_

Thank you for your thoughtful response, and I certainly appreciate the time and effort you've put into elaborating on your viewpoints. I agree with many of your points, especially those emphasizing the importance of maintaining a fair and transparent system that doesn't encourage frivolous complaints.

Nonetheless, I'd like to further elucidate my concerns:

1. Fees paid by Suppliers: Indeed, the EOS fee of £400 or more is substantial. However, we must also consider the relative scale of these fees against the overall revenue of energy companies. From the consumer perspective, the scale is reversed - with the burden of pursuing a complaint and the potential financial loss often being substantial.

2. Stress Brought on by Consumers: I agree that patience, persistence, and a structured approach to complaints can yield results. However, in certain situations, particularly those involving significant financial implications, prolonged customer service issues, or lack of transparent communication, stress is a natural consequence. The implication that this stress is entirely self-inflicted does not fairly represent the realities of navigating complex and sometimes frustrating complaint processes.

3. Impact on Consumers: The issue isn't solely about consumers seeking enrichment through compensation, rather it's about receiving just compensation when the services they pay for do not meet the expected standards, causing stress and disruption. The existing system, as you mentioned, costs the supplier, but it also costs the consumer in terms of time and, often, money.

4. Scale of Problems: While it's true that most transactions and interactions with energy suppliers proceed without incident, the number of consumers facing difficulties shouldn't be discounted just because they represent a small fraction of total customers. Each customer has a right to fair and transparent treatment.

To sum up, I am not advocating for excessive compensation but rather for a system that acknowledges and adequately addresses the inconvenience, stress, and potential financial loss experienced by consumers who have genuine grievances. I believe that we share the same goal: a fair, transparent system that discourages unfounded complaints while protecting and supporting consumers who have legitimate concerns.

Thank you again for engaging in this insightful discussion.

CSI_Yorkshire

So to summarise the pages and pages of 'elucidation' over several threads:

Fees should be a large proportion of companies' revenue.
Compensation should be large and frequent.
Only a few people have problems, but that just means more effort should be spent on complaint handling.
Despite almost everything being publicly documented and available (and endlessly debated), what we need is transparency.

All the companies' and regulator's fault, never the customer.

We are now all aware of your campaign, thank you.  It's not an insightful discussion when you repeat the same points in every longer and more convoluted paragraphs.  And it isn't helping any of the posters here.

Stuart_

Thank you for your response. I understand that my persistent discussion on this topic might seem repetitious to some. However, my intention is not to blame energy companies or regulators indiscriminately, but rather to highlight areas in which I believe there's room for improvement.

It's not about demanding disproportionately high compensation or laying the blame solely at the feet of companies and regulators. It's about fostering an environment where companies are incentivized to provide top-notch customer service and are held accountable when they fail to do so. At the end of the day, we all want an energy market that is efficient, fair, and customer-centric.

Additionally, my focus on the need for transparency is not meant to suggest that information isn't currently available. Instead, it's about how this information is communicated and understood by customers. Not everyone has the time or inclination to sift through pages of public documents or to understand industry jargon.

I understand that everyone's experience with energy suppliers differs, and this discussion is based on my personal experience and those of others who've shared similar experiences. Of course, there are many satisfied customers out there as well, and that's excellent news. It's about making that the norm.

Finally, I appreciate your input and understand if you find these discussions tedious. We're all here to learn, share experiences, and hopefully, contribute to a better energy market.

MattMattMattUK

Stuart_ said:

Thank you for your thoughtful response, and I certainly appreciate the time and effort you've put into elaborating on your viewpoints. I agree with many of your points, especially those emphasizing the importance of maintaining a fair and transparent system that doesn't encourage frivolous complaints.

Nonetheless, I'd like to further elucidate my concerns:

1. Fees paid by Suppliers: Indeed, the EOS fee of £400 or more is substantial. However, we must also consider the relative scale of these fees against the overall revenue of energy companies. From the consumer perspective, the scale is reversed - with the burden of pursuing a complaint and the potential financial loss often being substantial.

From the suppliers side if complaints rise profits fall, regardless of if those complaints have merit, their goal is to keep complaints low as that impacts profit, if complaints rise too much and cost too much then the shareholders will take them to task. If the consumer is correct they will suffer no financial loss, there are no costs incurred by a consumer in bringing a complaint, the consumer cannot lose.

Stuart_ said:
2.Stress Brought on by Consumers: I agree that patience, persistence, and a structured approach to complaints can yield results. However, in certain situations, particularly those involving significant financial implications, prolonged customer service issues, or lack of transparent communication, stress is a natural consequence. The implication that this stress is entirely self-inflicted does not fairly represent the realities of navigating complex and sometimes frustrating complaint processes.

The thing is none of this has to be stressful, have an issue, raise a complaint, take it to the ombudsman if necessary, but none of that has to be a stressful experience. The system is not complex and whilst unresolved complaints can be somewhat frustrating, the best thing to do is to raise a formal complaint and give the supplier a reasonable time to resolve it, or if they do not then beat them over the head with the ombudsman.

Stuart_ said:
3. Impact on Consumers: The issue isn't solely about consumers seeking enrichment through compensation, rather it's about receiving just compensation when the services they pay for do not meet the expected standards, causing stress and disruption. The existing system, as you mentioned, costs the supplier, but it also costs the consumer in terms of time and, often, money.

This largely appears to be point 2 again. If a complaint is upheld then the customer suffers no financial negatives, they have to be put back in the financial position they would be in if they did not have the issue. The existing system does not cost the consumer any money, it costs them a minimal amount of time if they handle it correctly. In cases where there has been significant disruption, or justified stress, then compensation can and is already paid. Whilst the average is <£100 there are cases where it is far higher and from what I have seen on those, usually when it ends up in the media, the payments are justified. Many cases however we also see people claiming they should be entitled to thousands of pounds of compensation when the issues are minor, or even caused by the consumer themselves. 

Stuart_ said:
4. Scale of Problems: While it's true that most transactions and interactions with energy suppliers proceed without incident, the number of consumers facing difficulties shouldn't be discounted just because they represent a small fraction of total customers. Each customer has a right to fair and transparent treatment.

The point is that you seem to be claiming that this is some large scale, systemic issue with the industry, when in reality it is a very very small percentage of customers who are impacted, around 200k complaints a year, of which around 55% are upheld, so 00.37% of customers have a complaint which goes as far as the ombudsman, the majority of which are minor and are resolved. Or also, another way to look at it is that suppliers pay out around £44 million to resolve legitimate complaints, and another £36 million to resolve illegitimate ones, with another £8.9 million in compensation on top. A customer does have a right to fair and transparent treatment, but again, fair and transparent does not mean financially rewarded.

Stuart_ said:
To sum up, I am not advocating for excessive compensation but rather for a system that acknowledges and adequately addresses the inconvenience, stress, and potential financial loss experienced by consumers who have genuine grievances. I believe that we share the same goal: a fair, transparent system that discourages unfounded complaints while protecting and supporting consumers who have legitimate concerns.

You keep mentioning "significant financial loss"/"significant financial implications", but that is not an accurate representation of the position consumers are in, either the complaint is legitimate and upheld, in which case they face no costs, or the complaint is not legitimate and they have to pay the bills that they should have paid in the first place. The inconvenience where it is genuine is already compensated for, perhaps not generously, but it is covered. What is not is the "I phoned the supplier three times a day for two months and got nowhere", but that was never a sensible use of time and is the consumer deliberately inconveniencing themselves, the solution is to raise a formal complaint and then, if unresolved, take that to the ombudsman. I also really object to the current trend of labelling everything as stressful, even more so when that leads people to demand compensation. 

I want a clear, transparent and effective system that functions at no cost to the consumer when their complaint is legitimate, I would like that system to be quicker than it currently is, the eight week window for complaint resolution is too long and the wait for the ombudsman is too long. Consumers should not be out of pocket when things go wrong and there should be compensation where reasonable, largely in line with the existing levels. Where we seem to fundamentally disagree is that I think that increasing compensation levels and creating a compensation culture will be good for anyone, even more so when there is not a penalty system for frivolous or consumer self-inflicted complaints. If we want a well functioning complaints system then it is a good thing that people are willing to work cooperatively and constructively towards that, but the idea that greater levels of "compensation" will to anything beneficial is for the birds. 

[Deleted User]

Let’s assume that the minimum compensation for all upheld consumer complaints was increased £1000; how would you go about getting things changed? You would immediately be up against people like me who would point out that compensation for poor customer service is just a cost of doing business which at the end of the day would be paid for by energy consumers.

Even the influential Martin Lewis doesn’t always affect change. This was his campaign in 2017:

https://www.moneysavingexpert.com/news/2017/11/mse-tells-mps-of-need-for-urgent-reform-to-ombudsman-farce/

EOS still does not have statutory enforcement powers over suppliers which I suspect is down to the fact that it is not a Regulator.

Stuart_

Thank you for your comprehensive reply, and I appreciate the detailed analysis and alternative perspectives you've provided on the topic. It's precisely these kinds of discussions that I believe can contribute to improvements in the sector.

To address your points:

1. Fees Paid by Suppliers: I concur that companies should aim to provide excellent service to avoid complaints, and indeed, any rise in complaints would impact their profit. I acknowledge that there are no direct financial costs for consumers to raise a complaint, but it's crucial to understand that consumers often feel the pressure in terms of time spent, stress endured, and sometimes, money lost (in the case of disputed bills, for example).

2. Stress Brought on by Consumers: I understand where you're coming from, but I would respectfully argue that not every consumer shares the same ability to navigate the complaint process calmly and efficiently. Stress can arise due to multiple factors, including personal temperament, previous negative experiences, and the financial implications of the issue at hand. It's not always about the system being complex; it can be about people's perceptions and feelings of being unfairly treated.

3. & 4. Impact on Consumers and Scale of Problems: I agree with you on some aspects. For instance, if a complaint is upheld, the consumer should ideally not suffer any financial loss. However, the notion of 'handling it correctly' is subjective and varies greatly among individuals. The time spent resolving a dispute might seem minimal to one person but significant to another. I'm not suggesting that all consumers should be given thousands in compensation for minor inconveniences. Instead, I'm arguing for a fair recognition of the inconvenience experienced by consumers, which currently feels inadequate.

Your perspective on the scale of the problem is valid, but I would argue that even a small percentage of dissatisfied customers represents an area that needs improvement. Just because it's not a majority doesn't mean it's not worth addressing.

In conclusion, I agree with you that we need a transparent, efficient, and fair complaint resolution process. Where we seem to disagree is on the impact of these issues on consumers and the current compensation structure. I respect your viewpoints and thank you for engaging in this meaningful discussion. It's through exchanges like these that we can continue to learn and, hopefully, contribute to a better service industry.

Stuart_

Dolor said:

Let’s assume that the minimum compensation for all upheld consumer complaints was increased £1000; how would you go about getting things changed? You would immediately be up against people like me who would point out that compensation for poor customer service is just a cost of doing business which at the end of the day would be paid for by energy consumers.

Even the influential Martin Lewis doesn’t always affect change. This was his campaign in 2017:

EOS still does not have statutory enforcement powers over suppliers which I suspect is down to the fact that it is not a Regulator.

Thank you for bringing up these important points. The hypothetical scenario you're describing with a minimum compensation of £1000 would indeed be a significant change and is likely to be met with resistance from various stakeholders. I would like to clarify that my goal isn't to arbitrarily inflate compensation amounts, but rather to explore ways of ensuring that consumers feel justly treated and adequately compensated for the time and stress they have undergone due to service failures.

As for your question regarding implementing such a change, it would most likely involve advocating for policy changes at the legislative level, lobbying regulatory bodies, and gaining support from influential figures or organisations in the energy sector.

It's true that even figures like Martin Lewis aren't always able to bring about the changes they advocate for. That said, it doesn't necessarily mean that change is impossible or not worth striving for. Advocacy and public discourse can gradually shift attitudes and regulations, as we've seen in many other sectors over time.

I wholeheartedly agree that EOS not having statutory enforcement powers over suppliers is a significant issue. This lack of power often leaves consumers feeling helpless and dissatisfied, further exacerbating the problems we've been discussing. It's a situation that needs serious attention and, potentially, reform.

The goal should always be to strike a balance where energy companies are held accountable for their shortcomings, consumers feel heard and fairly treated, and the cost impact on all consumers is considered and minimised. It's not an easy equilibrium to find, but it's certainly a conversation worth having.

Mobtr

Stuart_ can I just ask what type of complaint you think warrants compensation and how much you believe it should be? 

Is it a late bill, direct debit set incorrectly, incorrect bill etc or more serious matters? 

Stuart_

Mobtr said:

Stuart_ can I just ask what type of complaint you think warrants compensation and how much you believe it should be? 

Is it a late bill, direct debit set incorrectly, incorrect bill etc or more serious matters? 

I believe the type and amount of compensation should be determined by the severity and impact of the issue experienced by the customer.

For minor issues like a slightly late bill or a minor clerical error that is quickly corrected without causing stress or financial inconvenience, I don't necessarily think compensation is warranted. However, for more serious matters that have tangible impacts on a customer's life, such as significantly incorrect billing that results in financial hardship, persistent service failures, or incorrect direct debit setup leading to overdraft fees, compensation should indeed be considered.

It's important to note that it's not just about monetary recompense; it's also about acknowledging the impact that these mistakes can have on customers. Such recognition can go a long way in maintaining customer trust and satisfaction.

As to the amount, it's difficult to set a blanket figure as it would depend on the specific circumstances of each case. However, I believe it should be sufficient to cover any direct financial loss incurred as a result of the issue, and also reflect the level of inconvenience and distress caused.

Again, my main objective is to advocate for a system that treats consumers fairly and recognizes when their experiences fall short of the standard they should expect from their energy providers.