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Ofgem said there was an “industry-wide failure” with almost 60% of domestic customers dissatisfied with the way problems are dealt with and half of them still upset when a supplier considers the complaint has been resolved.

In a warning letter Ofgem said companies must improve the speed of resolving complaints, communicate better with customers during the process and be more proactive in finding a solution.

“The results [of our research] are unacceptable. I am therefore drawing attention publicly to these findings to leave you in no doubt about the need to act quickly to improve matters … I expect you to provide a public response to the issues raised in this letter.”

The supply companies, long the target of public and political attacks, have come under sustained criticism from Ofgem since Dermot Nolan arrived as chief executive in March and following a referral for a major investigation by the Competition and Markets Authority three months later.

 

In the letter released Nolan said the satisfaction scores that emerged in its latest survey were “frankly awful”, although the regulator has questioned whether this could be partly driven by heightened consumer awareness as well as a further deterioration in company service.

“Almost all energy suppliers need to improve their complaints handling as a matter of urgency. There are real business benefits to good complaints-handling schemes, and it shouldn’t need a regulator to tell companies about the importance of this.

“Suppliers must now tell their customers what steps they will be taking to put things right. We are already formally investigating Npower about complaints handling and other customer service issues, and this should send a strong signal to all suppliers that, where necessary, we will take action.”

Ofgem said satisfaction with Npower and Scottish Power had fallen particularly strongly, from 36% to 21% and from 44% to 20% respectively, with only SSE managing to maintain levels of satisfaction found two years ago.

The energy watchdog said it was planning to bring forward the next survey of complainants to see whether the necessary improvements had happened before deciding whether more regulatory action was needed.

Richard Lloyd, the executive director of the consumer group Which?, said the latest Ofgem findings chimed with its own research. “We found energy companies have hit rock bottom, with woeful service and dreadful complaints handling.”

Gillian Guy, chief executive of Citizens Advice, said: “Energy prices are up by a third since 2010 and people are now paying well over £1,000 a year to heat and light their homes.

“Energy is a basic essential for every household so firms need to do everything they can do get their service right and if something does go wrong, do their utmost to fix it straight away.”

 

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