Ofgem sounds warning over debt collection after seeing failed company customers harmed – but it admits it has few powers

Ofgem has warned that it will refer insolvency practitioners to their regulator or publicise bad practice if they do not treat energy customers fairly. The warning follows a number of energy supplier failures where the ‘supplier of last resort’ who takes on customers does not take on the failed company’s debt book. Customers have complained that they have been pursued by debt collectors.

In an open letter the energy regulator admits that it does not have a regulatory role in the governance of insolvency practitioners, but says it monitors customer experience during a transfer. It has seen “a mixed level of service and regard for consumers, including the vulnerable. Some practices have been very good and some have been extremely disappointing, and we believe some poor practices have led to avoidable consumer harm.”

It promised to raise concerns directly with insolvency practitioners, “with the clear expectation that they put things right as quickly as possible”. It may escalate a complaint through formal channels within the insolvency practitioner’s organisation, or consider a referral to the Insolvency Service or other appropriate regulator. “We will also consider making a public statement on our observations of the customer experience offered by an organisation’s insolvency practitioners.”

In the open letter, it reminded insolvency practitioners that energy customers should not be pursued for unbilled usage older than 12 months. They should be given an “active choice’ such as agreeing a reasonable payment plan, taking account of their ability to pay, and using an appropriate payment method.

It said, “we expect the insolvency practitioner to ensure that the debt collection agency behaves and communicates with customers in accordance with the expectations of a domestic energy customer.”

Read the letter in full