ScottishPower has been told it needs to vastly improve its customer service within three months - or face a sales ban from regulator Ofgem.
The industry watchdog has also launched an investigation into the way ScottishPower treats its customers, following a deluge of complaints over late bills and poor handling of official complaints.
Ofgem has told the Glasgow based firm that it has to answer all customer queries promptly, reduce billing backlog and resolve all outstanding Ombudsman complaints - or it will be banned from continuing sales and marketing activities to prospective customers.
The firm has today signed up to Ofgem targets to improve its customer service and said it would write individually to all customers who have experienced a service problem due to the implementation of a new customer management system.
It also pledged to “correct problems, pay appropriate compensation and ensure no customer is left financially disadvantaged”.
CONNECT WITH THE SCOTSMAN
• Subscribe to our daily newsletter (requires registration) and get the latest news, sport and business headlines delivered to your inbox every morning
Ofgem warned the firm, one of the Big Six energy companies, that it has to completely remove the backlog for acting on Ombudsman decisions for individual complaints by the end of this month; reduce the number of overdue bills from the current figure of 75,000 to just 30,000 by the end of December and “significantly” improve the speed of answering customer calls by the end of January.
Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: “ScottishPower’s customers are experiencing unacceptably long call waiting times and a drastic drop in overall customer satisfaction. Ofgem’s action today will drive immediate improvements for ScottishPower customers.
“In a properly functioning market we would expect companies to compete keenly on service. The need for our intervention here is yet more evidence that the energy market is not working for consumers. This further justifies our decision to refer the market to the Competition and Markets Authority.”
She added: “The investigation we launched today is the third time we have used our new standards of conduct to make suppliers treat consumers fairly. This is a clear signal to suppliers to up their game and give consumers the service they are entitled to.”
ScottishPower said it had recently invested £200 million in a new customer management system and had increased its staff by a total of 700 this year to manage all customer contact and complaints “as quickly as possible”.
In a letter to Ofgem, Scottish Power’s chief executive, Neil Clitheroe, said: “I would like to apologise unreservedly to any customer who has not received the level of service that they deserve from Scottish Power in recent months and provide my personal assurance that we will do what we can to correct every problem, pay appropriate compensation and ensure that no customer is disadvantaged.”
Tom Lyon, energy expert for uSwitch.com said: “We applaud Ofgem’s strong stance on this issue. Poor customer service and billing problems are some of consumers’ biggest gripes with the industry.”
Which? executive director, Richard Lloyd, said: “It’s right that Ofgem put ScottishPower into special measures for its poor customer service. This is yet another example of why energy suppliers are among the least trusted businesses, and why we need major reforms to fix the big six.”
Ofgem earleir this year referred the energy market to the Competition and Markets Authority for investigation.
Tom Greatrex, Labour’s Shadow Energy Minister and MP for Rutherglen and Hamilton West, said ScottishPower was treating its customers “with contempt”.
“From frustrating call waiting times, to late bills, to a backlog of complaints – Scottish Power appears to be running its business on the basis of what it can get away with,” he said. “For a company which announced profits of £582m in April, that is simply unacceptable.”
Each month, ScottishPower will publish its progress towards the Ofgem commitments on its website. If it misses any of its targets its proactive sales activities will instantly be suspended.
In June, Ofgem issued a similar notice to rival Big Six firm npower and three months later, wrote to all of the major utility firms about what it described as the “industry-wide failure” to handle complaints to an acceptable standard.
In September, it announced npower had met targets.
SCOTSMAN TABLET AND IPHONE APPS