Octopus Vitality to pay out £1.5m over hundreds of invoice errors | Octopus Vitality

[ad_1] The power regulator has ordered Octopus Vitality to pay £1.5m in refunds and compensation, after an investigation discovered hundreds of errors on prepayment meter payments.

An investigation by Ofgem discovered Octopus did not challenge closing payments to 34,000 prepayment clients who transferred to a different provider or terminated their contract throughout the required six-week interval between 2014 and October 2023.

Octopus has agreed to pay £1.25m in compensation to affected clients, and refund £231,000 in credit score that was remaining on accounts once they had been closed. The common sum paid for every affected buyer was £43, Ofgem mentioned.

Ben Martin, the director for shopper safety and competitors at Ofgem, mentioned it was necessary that clients obtain closing payments in keeping with its guidelines “so they're conscious of any credit score remaining on their accounts and might reclaim it”.

“That is notably necessary for prepayment meter clients who usually tend to be in monetary problem,” he mentioned. “We'll proceed to intently monitor compliance with our billing guidelines, and drive enhancements within the sector so clients can anticipate the very best requirements of service from their power provider.”

The regulator first recognized the issue after one other power supplier, E.ON Subsequent, self-reported the identical error to Ofgem.

Octopus mentioned the regulator had “spent two years investigating an alleged challenge with prepayment meter payments that had zero buyer complaints”.

The corporate – Britain’s largest family power provider – disputed the concept that prepayment clients should obtain a closing invoice when transferring out, arguing it's “inconceivable to implement generally”.

Octopus mentioned 60% of its prepayment clients don't notify the corporate once they transfer and lots of power suppliers “depend on gradual and unreliable conventional prepayment trade programs for closing billing”. Octopus added that it solely has checking account particulars for 10% of prepay clients, whereas 70% of refund cheques go uncashed due to an absence of forwarding addresses.

Octopus mentioned that as a substitute of following Ofgem’s closing invoice mandate, it expenses its prepay clients about £70 under the worth cap.

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The power supplier claimed that below Ofgem’s guidelines, solely about 16% of prepay clients would truly obtain a closing assertion and any due credit score refund.

Rachel Fletcher, the director of economics and regulation at Octopus Vitality, mentioned: “Octopus has all the time been targeted on doing the appropriate factor for purchasers and pondering exterior the field to ship good outcomes for purchasers regardless of imperfect trade programs and knowledge.

“With power prices hovering, we’d wish to see Ofgem put folks over insurance policies. Folks need decrease payments. We’d wish to see Ofgem focusing its efforts on delivering that.”