Almost half of all complaints resolved by the Energy Ombudsman last year were in relation to small energy suppliers, the dispute resolution service has revealed.
In its annual report published today (10 September) the service said while traditionally the “vast majority” of cases it dealt with related to the big six, there has been a gradual shift over the past few years meaning during the final quarter of last year around 45 per cent of all complaints resolved were about smaller, independent suppliers.
Furthermore in a foreword to the report Matthew Vickers, chief executive at the Energy Ombudsman, said work with failed suppliers had resulted in the service losing out on £1.3 million.
As a not-for-profit organisation, the Ombudsman is funded by the case fees that energy companies pay to have complaints reviewed.
The service said many of the failed suppliers have ceased trading owing it a “significant amount of money” in unpaid case fees, resulting in bad debt because there is no way for the costs to be recovered.
Vickers said: “In the run-up to a supplier going out of business, we have seen a pattern of deteriorating customer service levels and complaint handling disciplines, leading to an increase in the number of complaints being escalated to our service.
“We also put a significant amount of work into helping ensure that the transition to the SoLR lands as smoothly as possible for affected consumers, which involves more cost for our service and further demand on our resources.
“During 2018, this increased demand was accompanied by significant exposure to bad debt, with the ombudsman absorbing £1.3m of bad debt from failed suppliers in the year, impacting significantly on our reserves.
“This level of bad debt, as well as the additional work we do which is not linked to the case fee, means that in years to come we will have to think about the way we price and fund our service to ensure that this remains sustainable.”
A separate report published by the Ombudsman today revealed that more than 60 per cent of the complaints it received last year were about billing.
Meanwhile a total of 45,667 energy complaints were resolved last year and 64 per cent of these were upheld in favour of the consumer.