Suppliers who fail to switch customers on to their systems within five working days will be forced to pay out compensation, under proposals outlined by Ofgem.
The regulator is consulting on changes to the Supplier Guaranteed Standard of Performance (GSoP) which would align compensation terms with supplier licence conditions.
Currently, the GSoP requires a “gaining supplier to pay compensation of £30 to a customer if that supplier fails to complete a switch within 15 working days from the point at which the supplier has sufficient information to do so”.
Under the proposed change, that time will be slashed to five days to align with modifications to the supplier Standard Licence Conditions (SLCs) introduced in July 2022.
The changes to SLCs were introduced as part of the regulator’s Switching Programme designed to ensure faster switching rates.
Ofgem’s consultation document adds: “We consider that our proposed amended Guaranteed Standard 6ZA will continue to ensure appropriate compensation is paid to consumers for detriment suffered as a result of a delayed switch, whilst also being fair and reasonable to energy suppliers who will be liable to pay the compensation in the event that it is not met.
“We consider that more closely aligning the Guaranteed Standard with the updated supplier SLC requirements regarding switch speed is appropriate in the interests of regulatory certainty and clarity.”
It continues: “Finally, we consider that it is fair that the customer, having suffered detriment as a result of poor supplier behaviour in not meeting this Guaranteed Standard, should be compensated. Delayed switches can cause considerable customer frustration and inconvenience, not least as it often requires significant effort on the customer’s part to resolve.
“We consider that this amendment will help to improve customers’ confidence in the operation of the retail market.”
The consultation will close on 5 October with Ofgem saying that the amendment will come into force no earlier than 1 November.
It comes after Eon Energy was recently downgraded in the Citizens Advice rankings after repeatedly failing to hit targets related to switching customers. In particular, Eon has been punished for the speed at which it switches customers.
The supplier is one of three highlighted by Energy UK in the latest Energy Switch Guarantee (ESG) figures, covering Q1 2023. Both Octopus Energy and Outfox the Market have also been pulled up on their performances, with Octopus also missing targets relating to the speed of switching customers.
While the number of customers switching supplier remains modest compared to pre-crisis levels, Energy UK’s latest electricity switching figures show that 213,020 customers switched to a new supplier in July.
It is the first time the numbers have passed above 200,000 since before the crisis and is the highest recorded number of switches for 21 months. It is also an 83% increase compared to the same period last year.
Despite the uptick in people switching supplier, Energy UK stated that “increases remain modest”.
Prior to the energy crisis, the number of customers switching supplier each month often exceeded 400,000. In June, Energy UK said that “there is no sign the numbers will return to historic levels any time soon”.
It is also a long way off the forecasted possible surge predicted by analysts earlier this year.