Around 260,000 customers of Co-operative Energy are to be paid £1.8 million in compensation after the firm admitted failings in its complaints resolution, call handling and billing processes.
Co-operative said the problems were the result of the introduction of a new IT system in March last year and added it had voluntarily withdrawn from marketing activities to help focus on improving its services to its existing customers.
ScottishPower has also previously come under fire from consumers after a series of failings caused by the introduction of a new computer system.
Ben Reid, chief executive of Midcounties Co-operative said: “As the UK’s only member-owned energy supplier, we put our customers at the heart of everything we do and their interests first.
“We have apologised to those customers who were affected by the problems we experienced when we introduced a new IT system last year. The system issues are now resolved and we have made significant improvements to our service.”
Watchdog Ofgem said that £1.6m of the money had already been paid, with the remainder to be paid shortly to those customers not yet compensated. Any cash Co-op is unable to return to customers will go to the charity StepChange to help energy consumers in financial difficulties.
Martin Crouch, senior partner at Ofgem, said the company had also taken too long to resolve a significant number of the complaints made by customers “While customers experienced unacceptable levels of service, Co-operative Energy has done the right thing by taking responsibility for the situation and paying out compensation to those people affected.”
“If trust is to be restored in the energy market suppliers must make amends to their customers when things go wrong. We want all suppliers to constantly ensure customers are treated fairly.”
Claire Osborne, energy expert at uSwitch.com, said: “This large settlement with Ofgem shows energy suppliers simply cannot afford to fail in basic customer service. Ofgem’s tough stance on this is a clear sign to the wider industry that customers must be treated fairly. Poor service will simply not be tolerated.”