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Npower hit with £26m fine for 'failing to treat customers fairly'

Video report by ITV News Consumer Editor Chris Choi

Energy giant npower has been fined £26 million for a string of billing and complaint handling failings which meant customers were not treated fairly.

More than 500,000 customers were affected by the failings, according to regulator Ofgem - and the fine will be split between some of the worst-affected customers and charity.

It is one of the biggest-ever fines issued by the regulator, and the biggest relating to household energy, rather than industrial.

If the company fails to meet new targets for improvement, Ofgem warned, it will be forced to shut down all sales activity and advertising until all standards have been met.

npower has been fined £26m Credit: PA

Ofgem said npower's problems appeared to begin when they introduced a new IT system in 2011.

Between September 2013 and December 2014, more than half a million late bills were issued, while some customers also received inaccurate bills with little to no detail on how they had been calculated.

More than 500,000 late or inaccurate bills were sent out Credit: PA

More than two million complaints were filed about late or inaccurate bills during this period, the regulator said - and npower failed to resolve these promptly.

However, they continued to pursue debts which were in dispute, causing "significant distress and worry for many".

Complaints were also recorded incorrectly and not followed up on - and often, Ofgem said, customer service advisors failed to inform customers that they had the right to refer their case to the Energy Ombudsman if their complaint was still unresolved after eight weeks.

Ofgem chief executive Dermot Nolan said npower had "failed" its customers, describing billing and complaint-handling procedures as "chaotic".

He said:

npower failed its customers. Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable.

npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.

It’s important that all suppliers ensure they follow the principles of treating customers fairly at all times.

The payment of £26m sends a strong message to the industry that we expect them to act quickly and effectively to ensure a good customer experience.

– Dermot Nolan, Ofgem