Following several failings identified by Ofgem in how OVO handled customer complaints, the energy company has agreed to pay £2.37 million in compensation as well as redressing payments.

The regulator identified 1,395 OVO customers affected by issues including lengthy delays in addressing complaints, which in some cases took up to 18 months.

OVO will pay £378,512 in compensation directly to affected customers and has also paid an additional £ 2 million to the Energy Industry Voluntary Redress Scheme in recognition of the severity of consumer detriment caused.

The affected customers will be contacted directly by OVO, and they do not need to take any action.

When did Ofgem’s concerns come to light?

Ofgem first contacted OVO in June after receiving reports over the time taken to address complaints referred by Citizens Advice Scotland’s Extra Help Unit, and to action decisions from the Energy Ombudsman.

The regulator identified key areas of improvement including upgrading OVO’s complaint handling system and addressing resourcing issues. Ofgem then asked OVO to provide a plan on how it would address and resolve these issues.

Is OVO rectifying the situation?

Jacqui Gehrmann, deputy director of retail compliance at Ofgem, said: “Energy is an essential service. When things go wrong, it can cause consumers a lot of distress. In this case OVO failed to adequately protect and respond to their customers when it was needed most. This is not acceptable.

“Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that OVO’s performance was falling below acceptable standards.

“We are committed to driving up standards for consumers across the board, and this action serves as a reminder to all energy companies that we will not hesitate to take swift and definitive action when they fail to comply with the rules.”

Following Ofgem’s intervention OVO has increased its complaint handling resources, enhanced its complaints management system and improved its case management processes to make sure senior colleagues have oversight of complaints.

How did the issue come to light?

Natasha Gilmour, head of operational support at Citizens Advice Scotland, said: “The Extra Help Unit is a GB-wide service managed by Citizens Advice Scotland to help vulnerable consumers experiencing difficulties with their energy suppliers.

“While it’s rare for a compliance case to be necessary to resolve such issues, it is reassuring to see how OVO has responded to the investigation by Ofgem, and we are satisfied that the new practices implemented are ensuring good and timely outcomes for our clients.”

“We’ve worked closely with energy suppliers since 2008 and we’re hopeful these relationships will continue to grow as we work together to improve outcomes for consumers needing our support.”

The Energy Ombudsman commented: “We welcome the news that following compliance engagement between Ofgem and OVO, consumers will be compensated for OVO’s failures to implement the remedies set by the Energy Ombudsman.

“Our role is to resolve disputes between consumers and energy suppliers, providing independent and impartial decisions that ensure fair outcomes. These decisions are legally binding, and suppliers are required to implement them within 28 days. While the majority of resolutions are carried out on time, there are instances where consumers face unacceptable delays.

“It is reassuring to see that this investigation is now concluded, and that OVO has reviewed and improved its systems and procedures.”

Ofgem has collected more than £400million in payments since 2020 through their compliance and enforcement activities which have been used to help households struggling with their bills.

In 2023 alone, Ofgem recovered a total of £77.2 million in fines, customer refunds, compensation, and alternative action payments – up by £50.5 million compared to 2022.