Consumers are to automatically receive at least £30 in compensation if they experience a problem in switching between suppliers, under new Ofgem proposals.

The regulator said its research indicates many consumers are deterred from switching because of fears that something could go wrong, especially if they have experienced a problem before.

The new rules will give consumers peace of mind and serve as a “wake up call” for suppliers, who will be incentivised to iron out problems in their switching procedures.

The problems which could trigger an automatic payout include being switched to the wrong supplier, switches taking longer than 21 days to complete, and final bills and refunds arriving late. Consumers would receive compensation for each problem they experience.

Ofgem interim executive director for consumers and markets, Rob Salter-Church, said: “While the vast majority of switches go smoothly, too many problems are still occurring. These can cause inconvenience, and in some cases, real worry and stress for those affected.

“Today’s proposals for automatic compensation will strengthen protection for consumers who switch, and should serve as an incentive for suppliers to get switches right first time.”

Citizens Advice chief executive Gillian Guy commented: “People can save up to £300 by changing their energy provider, but are often put off by the worry that things won’t go smoothly. It’s right that suppliers pay a price if consumers face issues like late final bills or late refunds. These protections should help increase trust in this process.

“While today’s announcement is positive news for households, small businesses will not get the same protections. Small businesses suffer similar issues to households when it comes to switching supplier and Ofgem should look to extend the protections announced today.”

In February, Ofgem gave the green light to plans to overhaul industry systems by 2020 to allow for next-day switching.

Earlier this week, the regulator announced a review of its licensing regime for suppliers to ensure that consumers are protected from poor customer service and financial instability.

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