Ofgem has handed out its third biggest fine to one of the big six energy providers after Scottish Power agreed to pay £18m for poor customer service.
In a scathing review of the company’s treatment of customers, the regulator said Scottish Power had failed to provide even the basic level of service required, attracting more than one million customer complaints between June 2013 and December 2015.
Dermot Nolan, Ofgem’s chief executive, said Scottish Power’s treatment of gas and electricity customers had been “discernibly worse” than its peers.
Speaking on BBC Radio 4’s Today programme, he added: “This is a significant amount of money. It’s basically because Scottish Power failed to treat its customers fairly over a sustained period of time.”
An Ofgem investigation found particular issues at Scottish Power over call handling, complaint resolution and billing.
Many customers had to wait for unacceptably long periods before their calls were answered, while complaints were handled poorly and took too long to be resolved, Ofgem said.
More than 300,000 customers received late final bills, meaning some did not promptly receive money they were owed.
Nolan however said it was irrelevant: “I don’t care how they messed up, it’s their requirement to get the IT right. If they produce poor quality service I frankly don’t care why.”
He said consumers could “vote with their feet” and switch suppliers if they were not happy with the level of service they were receiving.
Commenting on Scottish Power’s settlement, Tom Lyon from uSwitch.com said that by imposing such a big fine, Ofgem was sending a warning shot to the energy industry that consumers must be treated fairly.
He added: “The settlement should also serve as a warning to new suppliers entering the market, who must learn from the mistakes of the big six and operate in a way that keeps customers at the heart of everything they do. All suppliers have to give consumers the quality of service they deserve or they will pay the price.”
Of the money raised by the fine, up to £15m will be paid to vulnerable Scottish Power customers who were affected by the company’s failings, with the remainder donated to charity.
Scottish Power said that now its new IT system was in place “our service performance has significantly improved”.
Neil Clitheroe, chief executive of energy retail and generation at the company, said: “I gave a guarantee that no customer would be left out of pocket by these issues and we continue to compensate customers who have been affected.”
Lewis Shand Smith at the energy ombudsman said Scottish Power had made some progress on customer service but added there was “still a lot of work to do”.
The ombudsman provided evidence to the Ofgem investigation, which began in November 2014, and it said it was working with Scottish Power to make further improvements.
