Scottish Power keep customers hanging on

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Ofgem has launched an investigation into Scottish Power's complaints handling procedures and issues with late bills.

Scottish Power were formerly one of the better energy providers in terms of customer service and satisfaction. In Sept 2013 only SSE received fewer complaints.

But the introduction of a new billing system saw the number of customer issues rocket. By November last year only Npower received more complaints.

"Please hold"

Ofgem has given Scottish Power three main tasks to focus on.

• It must significantly reduce call waiting times from an average of three minutes to two minutes by the end of January;
• It must reduce the number of late bills from more than 75,000 at the moment to fewer than 30,000 by the end of December;
• It must clear its backlog regarding acting on any rulings made by the Ombudsman by the end of this month

If Scottish Power fails to comply with the last of these targets, Ofgem says the provider could face an immediate ban on telesales.

Earlier this year Npower were given a similar ultimatum, with two months to sort out their much larger billing issues - a reflection perhaps of their significantly worse customer service record.

Ofgem wants the average time customers are left waiting before their call is dealt with brought down to two minutes.

This may sound like a long time, but waiting times of up to 30 minutes are common according to customers.

And Ofgem says Scottish Power's weekly progress reports must highlight call waiting times according to 10-minute increments - that is, calls kept waiting up to 10 minutes, then 20, then up to half an hour and so on.

"IOU"

Energy complaints to the Ombudsman - the final step if customers aren't satisfied with how their provider deals with them - have risen dramatically this year, with more than 37,000 up to the end of October alone, compared to just under 18,000 for the whole of last year.

Unsurprisingly, given Scottish Power's issues, and Npower's before them, billing problems make up the bulk of the grievances, with 84% of complaints linked to backbilling, disputed and inaccurate charges, and the failure of energy companies to produce bills at all.

Along with many customers not receiving bills when they expect to, people who have left Scottish Power for another provider have found their final bills missing, late, or wrong.

Consumer forums are full of stories from customers who have reported missing credit or have been overcharged, or who haven't received bills for months.

Ofgem's regulations state that suppliers must take "all reasonable steps to send a final bill within six weeks of a domestic customer transferring or terminating the contract".

It's adding insult to injury that customers fed up with the service they've received in the past year can't then settle up and move on.

What are Scottish Power doing?

As well as extending their call centre hours to 10pm to help deal with the volume of calls, Scottish Power say they're taking on another 250 staff, creating 700 new customer service roles within the company this year.

Scottish Power chief Neil Clitheroe has promised, "no customer will be left out of pocket as a result of any service problems arising from the migration to our new system".

In a letter to Ofgem, he said customers receiving late bills - including final bills - would be entitled to "defined reductions".

Meanwhile people changing to Scottish Power would receive "appropriate compensation" for any savings they missed out on through delays to the switching process.

But Scottish Power said back in May that all 5.6 million of its customers had been transferred to the new system - so why are there still so many problems?

Crime and punishment

If Ofgem finds evidence of gross negligence at Scottish Power, the company could face a fine of up to 10% of its turnover. In 2013, Scottish Power had revenue of around £8.2 billion.

In January 2012, British Gas was fined £2.5 million, and Npower £2 million, for their poor complaint handling.

But more recently, EDF were fined £1 for complaints handling issues, after offering to pay £3 million to Citizens Advice.

Ofgem said, "the £3m payment... to aid consumers will be of greater benefit to energy customers than if a substantial penalty was imposed."

And in June 2013 British Gas made a payment of £10 million directly into its hardship fund, the British Gas Energy Trust, which provides debt relief for energy bills and other expenses, as recompense for its own billing issues.

When E.On made similar errors, they committed to paying back the £1.4m they had incorrectly charged customers, made a £300,000 donation to a fund they run in conjunction with Age UK - and that was that.

As the investigation has just begun, it'll be some time before we know whether Scottish Power will face a fine or similar financial redress - but given the above rulings, the threat of a ban on new sales might be a bigger spur for the company.