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Supplier of Last Resort Workshop

Guidance last updated April 2020

Introduction

Ombudsman Services hosted a workshop on the Supplier of Last Resort (SoLR) process on 9 September 2019. Invitations were extended to suppliers who had recent experienced of the SoLR process and most suppliers attended. Representatives from Ofgem and Citizens Advice also took part.

Ombudsman Services would like to thank all attendees for their input and collaborative approach which allowed the various topics to be discussed in detail. In addition, we especially thank Hayley Monks, Managing Director of Think, Inspire and Create who facilitated the day and ensured discussions focused on the issues at hand and that positive outcomes were reached.

The Session and its Aims

The overall aim of the workshop was to build a standard approach [within the wider SoLR process] for dealing with complaints and customer service issues from failing suppliers to ensure the gaining supplier has the best possible foundation upon which to build new customer relationships.

  • In the morning session, presentations were given by Citizens Advice and Ombudsman Services.

  • Citizens Advice provided an insight into SoLR from a consumer’s perspective.

  • Ombudsman Services ran through the results of a pre-workshop survey which played back common customer service and complaint handling challenges experienced by gaining suppliers.

  • Ombudsman Services also clarified its stance in regard to case acceptance and investigations for SoLR related complaints.

In the afternoon session, the participants split off into smaller groups to discuss the ‘must haves’ to improve the SoLR customer service and complaint handling processes for a bidding (and ultimately) successful SoLR. A number of key topics flowed from these discussions and by the end of the session these were split into the categories of regulation, measures, third party obligations, communication and data.

The agenda and slides from the morning session can be found in the Appendices at the end of the report.

This report will summarise the key messages and outcomes from the workshop.  

Key Messages from the Morning Session

SoLR – A consumer experience and perspective

Citizens Advice explained that the SoLR process created uncertainty and that customers did not want to feel forgotten.

Common questions from customers centred around the status of credit balance they had with their previous supplier, the legitimacy of the actions taken by the SoLR when taking over their supply and why the new tariff they had been placed on was more expensive than the one they been on with the previous supplier. In addition, customers were unclear what would happen to any in-flight complaints they had made about the previous supplier and whether they could still pursue any concerns they had with the new supplier.

There was concern over the lack of protections for customers where debt balances were concerned, in particular when the customer was in vulnerable circumstances. Customers had also highlighted they had been subjected to aggressive debt collection practices and in some cases they were being chased for more than they owed.

Citizens Advice referred suppliers to its Good Practice Guide which contains advice for how customers in vulnerable circumstances can be signposted to the right source of help. Citizens Advice also said that customers needed information about what would happen after a SoLR was appointed and encouraged SoLRs to agree a plan of action with administrators regarding debt and credit balances which could be communicated to customers.

SoLR – Suppliers’ experiences and perspectives

Next, Ombudsman Services talked through the pre-workshop survey results which had been shared with suppliers to understand their experiences during the SoLR process. Overall, suppliers described their experience of the SoLR Process as negative. There were mixed views about whether participation in the process had enhanced or damaged their reputation and brand. Only some of the suppliers surveyed would take part in the process again.

The survey highlighted problems suppliers had in working with the administrator. Most suppliers felt that, often, administrators did not understand the energy sector and this caused problems. In particular, over two thirds of suppliers had encountered problems with obtaining accurate data from the administrator. This had an impact on their ability to give meaningful advice to new customers and to produce final bills.

Suppliers were also asked about their experiences of working with Ombudsman Services during the SoLR process. Overall, suppliers reported a positive experience. There were, however, differing views about how in-flight complaints made about the failed supplier should be handled. Currently, once an energy supplier has ceased trading, the customer loses the right to pursue any complaints they may have made about the failed supplier. Ombudsman Services has suggested that SoLRs take over the management of any in-flight complaints on a voluntary basis, but many suppliers do not agree. We asked whether suppliers would be prepared to take responsibility for in-flight complaints if they could claim back the cost of doing so, but only a quarter of suppliers said they would.  

SoLR – Ombudsman Services’ experience and perspective

We set out our approach to SoLR-related complaints.

We explained that there has been a lack of clarity as to whether customers can continue complaints made about the failed supplier or whether they have the right to raise complaints about the SoLR. In response, we have set out our standard approach to complaints involved in the SoLR process to help all parties to understand customers’ rights in this area.

Once a supplier has ceased trading, we will discontinue the investigation any complaints that may have been made about the supplier on the basis that there is no prospect that any remedies we may have required will be fulfilled.

If a customer wants to complain about a debt balance that has been built up with the failed supplier, they will be signposted to the administrator. As administrators do not participate in our scheme, we will not be able to become involved in the dispute.

Given that in all cases so far, SoLRs have committed to honouring any credit balances built up with failed supplier, we consider SoLRs should take responsibility for any complaints made about the credit balance. If, after complaining to the SoLR, the complainant remains unhappy, Ombudsman Services will accept complaints for investigation. The only exception to this is cases where a customer of the failed supplier transferred to another supplier prior to the appointment of the SoLR. In this case, the complainant will not have become a customer of the SoLR and therefore, under our terms of reference, are not eligible to complain to Ombudsman Services.

When deciding whether an opening credit balance is accurate, as usual we will consider all evidence submitted from both parties in terms of deciding whether the customer has been treated fairly – and this is likely to vary significantly from case to case.

When deciding whether a SoLR has refunded a credit balance promptly, we take account of how the SoLR process works and the fact that the supplier will be dependent on the administrator to provide confirmation of customers’ accounts these may impact on the ability of the SoLR to meet standard regulatory timescales when issuing final bills.  

Workshop Themes and Outcomes

In the afternoon, the attendees split into smaller groups and discussed how best the SoLR customer service and complaint handling processes could be improved to assist the bidding process and provide a successful SoLR experience for energy suppliers and their customers.

On the day, five main themes were captured and later shared with the participants for feedback. On reflection and following feedback we have decided to group the outputs into more defined and focused themes. This has resulted in a total of eight themes.

Below is a record of these eight main themes and the possible actions which could be taken to improve the situation.

1. Improvements to the SoLR appointment process

There were calls for improvements to be made to the SoLR process to help suppliers understand what they are taking on:

Table

2. Clarity over what is expected of the appointed SoLR

It was also felt that it would be helpful to set out what the SoLR could reasonably be expected to do after being appointed to take on the failed supplier’s customers – taking account of some of the difficulties many of the SoLRs have experienced – e.g. the reliance on third parties, the difficulties obtaining information about customers’ accounts etc.

2.	Clarity over what is expected of the appointed SoLR

3. Improving the transition from the failed supplier to the SoLR

Suppliers often struggle due to the poor quality of other supplier’s billing systems. And sometimes, billing systems cannot be accessed at all. Suppliers felt that the process of taking over the running of customers’ accounts would be significantly improved by taking the following steps:

3.	Improving the transition from the failed supplier to the SoLR

4. Third Party Obligations

As well as the SoLR, other organisations also have an important role to play in the SoLR process and it was felt that these organisations should be brought into discussions to ensure consumers experienced as little disruption as possible:

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5. Communication

At the heart of providing customers with the best possible journey is effective and consistent communication. It was felt that by combining efforts to agree standardised communications and timescales, uncertainty could be avoided for all parties.

The following issues were discussed:

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6. Reporting

SoLR has thrown up issues around how complaints are reported – with SoLRs feeling that they are often cast in a poor light because they are having to deal with issues that were caused by the failed supplier. Many attendees felt that the way in which complaints should be reported following a SoLR should be reviewed.

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7. Better monitoring before a supplier ceases trading

Suppliers also felt more could be done to prevent suppliers from ceasing trading, as well as earlier identification that a supplier was in trouble.

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8. Promoting the success of SoLR

Many participants felt that suppliers are attracting a lot of adverse publicity and damage to their brands from the SoLR process. Though the process could undoubtedly be improved, it is ensuring that customers do not lose supply and is protecting credit balances. Participants felt that the successes of SoLR should be celebrated.

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Summary and Next Steps

In summary, the following items need to be taken on by the working group and explored further:

  • Define key terms to within the SoLR process to remove any ambiguity between the stakeholders.

  • Explore the possibility of compulsory ownership of the final billing process by the SoLR.

  • Define all parties in a SoLR and what they are responsible for.

  • Agree standard guideline/timescales for consumer outcome in SoLR process.

  • Create an 'Industry' process for SoLR that breaks down into all major constituent parts.

  • Create a process to register/dispute Open & Close meter readings (especially In a SoLR where an administrator is involved).

  • Create a consistent communication from all parties involved within the process.

  • Create a 'what to do when your supplier goes into administration' booklet for customers to manage uncertainty.

  • Proactively celebrate success stories relating to SoLR events and good practice.

Some stakeholders have already expressed interest in setting up a working group to discuss the above issues and these are registered. We consider the working group will be most effective through a face to face meeting. Once business activity returns to normal following the COVIOD-19 outbreak we will in touch with the relevant parties to confirm a date for the first meeting and the areas we intend to cover.

There are also various actions for Ombudsman Services itself, which will include making enquiries and liaising with a number of stakeholders. Some the actions are already being worked by other organisations (notably Ofgem’s supplier licencing review). To avoid duplication some actions have been removed to leave the following:

  • Collaborate with CA and Ofgem to agree a consistent message around tariff changes to manage customer expectations.

  • Discuss with Ofgem the possibility of setting up a Day 1 summit meeting with the relevant stakeholders following a SoLR event.

  • Define common complaint types within the SoLR process and highlight any gaps in ADR to the regulator.

  • Liaise with CA and Ofgem to agree a fair and reasonable reporting method relating to SoLR complaints.

  • Monitor outcome of Ofgem Supplier Licensing review in regard to measures to prevent suppliers ceasing to trade in the first instance.

We will work through these actions and publish outcomes/feedback to working group where relevant and when completed.

Appendices

You can access the presentation slides below.