Ombudsman Services | Nov 29, 2019
Thank you for your responses to our request for comments, suggestions and queries regarding our work on backbilling following the energy sector liaison panel (SLP) in September.
We received a total of four responses from suppliers and stakeholders. The responses broadly centred on two themes - around how the position had been put together and around the individual scenarios themselves.
With regard to the background behind the stance we received comments regarding the nature of the guidance and questions around Ombudsman Services' role in producing it.
Specifically, it has been queried why we are providing additional guidance on this subject when this is considered to be Ofgem’s role. A query has also been raised asking whether all suppliers must operate within the guidance, given that we have consulted with Ofgem on this guidance.
For clarity, this document is not policy, it is not guidance, nor do we believe this to be a position that influences the principle-based nature of the licence conditions.
It is our stance on some key points around backbilling and is how we will approach complaints should they be escalated to our service.
Following the introduction of the backbilling licence condition, we had seen inconsistency of approach both within Ombudsman Services and across the sector amongst energy suppliers. We also received a number of requests from suppliers to provide some clarity around our position and in some cases we have provided training.
We agree that it is for suppliers to individually interpret licence conditions on a case-by-case basis. We also agree it is not our role to write Ofgem’s position or provide further explanation in addition to the licence condition on behalf of Ofgem.
For the avoidance of doubt, we have now renamed the document to our stance on backbilling.
Turning to the specific points raised in regard to the stance itself, we were questioned on our wording relating to a customer being obstructive or manifestly unreasonable.
We are clear in our stance that it is the supplier’s responsibility to demonstrate when a customer has acted in an obstructive or manifestly unreasonable way. While we gave an example that could be considered in line with this exception, this was purely to show an example.
Some issues were raised in relation to our backbilling stance and erroneous transfers, relating this to the recent input of guaranteed standard payments.
Ombudsman Services does not feel that the two issues are related. As explained in the stance, any charge recovery is subject to backbilling, including a bill following an erroneous transfer.
It is possible, although completely avoidable, that a supplier could be required to apply backbilling principles as well as a guaranteed standard payment, following an erroneous transfer.
There was some concern in relation to situations with suppliers’ reasonable steps to read a meter, under SLC21B.4, being contradicted by our stance.
This suggestion appeared to be in relation to the specific wording of this condition, when in direct comparison to wording in an Ofgem document relating to backbilling. The wording is similar and thus the comparison was made.
Our stance was simply intended to point out that a supplier should not use the adherence to a different condition as a reason why backbilling does not apply.
In the Ofgem document, the regulator does suggest that if a customer has ignored or refused reasonable supplier attempts to access the meter following the supplier’s identification of a problem, then the customer could be obstructive or manifestly unreasonable. Ombudsman Services fully supports this position.
The difference here is that the action is directly linked to an exception and not simply because attempts have been made to read the meter.
It is also important to mention and point out that in this concern, what was not considered from the same document, was Ofgem’s position on customer fault.
Ofgem was very clear that the backbilling limit applies when a consumer is not at fault, even when the fault is not directly with the supplier. Therefore, it is possible that a supplier could have acted in line with all other conditions, but due to the customer not being at fault, backbilling could still apply.
Our stance is that adhering to other conditions from licence, particularly a supplier showing how it has taken all reasonable steps to obtain a meter reading is not an exception to remove backbilling protection. This would need to be specifically linked to an exception.
One issue was raised in direct challenge to scenario A. In this challenge, it was suggested that backbilling did not apply as the supplier had sent accurate bills to the customer. This scenario was used to directly point out the difference between a bill and a direct debit statement and how the latter is not charge recovery. Ofgem, in the licence conditions states that a bill is an invoice or demand for payment or any other instrument of similar purpose.
Ofgem has further stated:
The Bill is as currently defined in the supply licences – “an invoice or demand for payment or any other instrument of the same or similar character or purpose”. Not all customers need to get Bills. For customers who pre-pay for their energy (either by direct debit or prepayment meter), payment does not need to be demanded so these customers do not receive Bills. Technically only customers who pay on receipt of a Bill get a Bill, as this contains the demand for payment that the customer then responds to. Bills generally contain Relevant Billing Information as well, to explain to the customer how the demand for payment has been arrived at, and how and when it needs to be paid.
We see this as a key point for backbilling situations, as only a bill that seeks payment amounts is a charge recovery action. We would not consider a direct debit statement to be charge recovery action. This stance was provided to Ofgem, to which it replied:
Agree with this, because it is the responsibility of the supplier to ensure DD payments match a customer’s consumption. The supplier cannot absolve itself of this responsibility by sending statements to the customer.
And in its policy intention, within its statutory consultation (Protecting consumers who receive backbills) it stated:
We intend to cover charges older than 12 months, regardless of payment type. This means for example that alongside payment on receipt of bill, consumers paying by prepayment meters would be caught by this prohibition. It also applies to Direct Debit adjustments if they relate to charges which are over 12 months old. This section covers both fixed (Standing Charge(s)) and variable (Unit Rate) charges.
Therefore, in scenario A, we would conclude that backbilling would apply. It is also worth pointing out that during the workshop element of the SLP, the majority of suppliers in attendance agreed with this stance.
In addition to the above, Ombudsman Services would like to reiterate that we have held backbilling workshops with several suppliers, before and after we created the backbilling stance document. Each supplier involved in such a workshop has noted its value and been positive about this.
To conclude, our backbilling stance, which is only in relation to elements of backbilling and not an inclusive list, is not intended to be policy or guidance, is not a demand for how suppliers should be acting, it is simply our general stance on these elements.
While we are satisfied that our stance is reasonable, we recognise that in a specific case, a supplier might have a difference stance, that may too be reasonable. In this situation, we would consider the supplier's stance in line with the situation and not directly in comparison to our stance.
We welcome the points raised and while our stance remains the same, we have updated this where appropriate to provide further clarity.