By DARA BUTTERFIELD
Spark Energy – which is based in Selkirk in the Scottish Borders – has been ordered to pay a £250,000 fine after breaking the rules relating to switching consumers’ energy suppliers.
UK regulator OFGEM has told Spark Energy to pay £125,000 apiece to Citizens Advice Scotland and Citizens Advice England & Wales after an investigation found it breached switching rules and complaints handling regulations.
Spark wrongly stopped customers switching to other suppliers, transferred customers when it should not have, and fell short of billing and complaints handling standards. The failings largely occurred between June 2010 and October 2013.
Ofgem opened the investigation in June 2013. It was concerned about the high number of complaints concerning Spark that it received from several sources. This included a reference in May 2013 from Consumer Focus. There were complaints about customer transfers, billing and refunds. Ofgem was also concerned that Spark was not handling complaints according to the regulations.
Spark was found to have blocked customers from switching to other suppliers, and transferred certain customers to other suppliers without their express consent, to stop them building up more debt with Spark. In addition, the supplier did not bill customers correctly, nor return refunds promptly.
Sarah Harrison, senior partner in charge of enforcement at Ofgem, said: “The fact that Spark’s problems occurred when it was establishing itself in the market is no excuse for not complying with its obligations. Following our intervention, Spark has made significant progress and has put in place new processes to resolve its issues.
“The £250,000 penalty reflects the seriousness of the breaches but also Spark’s size, and that during the investigation it has worked hard to resolve the issues identified.”
A spokesman for Spark Energy said: “We welcome the manner in which Ofgem has dealt with these issues. We’ve learned valuable lessons from this process and recognise there were things we should have done differently, and we apologise for these failings.
“However we’re pleased Ofgem has recognised the progress we’ve made over the past 21 months to transform our levels of customer service in this complex and difficult market.
“There has been a wholesale restructuring of the business and an overhaul of key personnel, including the appointment of a new CEO, a new director of compliance, a new head of legal and a new head of customer service.
“We’ve also invested £2.5m to double our customer care team from 60 to 120, overhaul training and introduce state-of-the-art IT systems.
“In the final quarter of 2014, more than nine out of 10 customer complaints were handled within 24 hours, a massive improvement on the second quarter of 2013 figure of under 30%, showing the progress that Ofgem has recorded.”
Last month, Spark Energy became the first supplier outside the Big Six to announce a price cut for existing customers and new customers.
Chris Gauld, Chief Executive, Spark Energy, said that this reduction was made possible due ‘to the continued growth in size and efficiency of our business stemming from over £2.5m of recent investment in customer experience’.