Why was E.On Next fined by Ofgem? Complaints criticism explained - how much compensation customers will get

Energy supplier E.On Next is set to fork out millions of pounds in compensation as a result of what Ofgem has described as “unacceptable” standards of customer service.

The energy regulator ordered the payout after finding what it described as “severe weaknesses” in the provider’s systems. These included long call waiting times and a large number of unanswered calls.

Ofgem has ordered several energy companies to make payouts to compensate for their failings in recent weeks. Around 100,000 households who used to get their gas and electricity from Octopus Energy, E.On and Good Energy received an average of £70 in May for late final bills and compensation payments. Also last month, Ovo Energy and Good Energy both had to fork out an average of £150 to customers they had overcharged.

It comes as energy bills are due to tumble from next month as lower wholesale energy prices feed through into domestic bills. The Ofgem energy price cap will drop by the equivalent of £426 a year to an average of £2,074, raising the prospect of more competitively priced fixed rate deals.

So, how much will E.On be paying out to its customers - and who will be eligible for the compensation?

What has E.On Next done wrong?

Between October and December 2022, Ofgem probed all UK energy suppliers to see how well they were operating their customer service.

It found almost all suppliers needed to make improvements and split them into three categories based on how much change was needed. ‘Moderate’ weaknesses were discovered at 11 firms, including British Gas and EDF, while ‘minor’ weaknesses were reported at five suppliers: Bulb, Ecotricity, Green Energy, Shell and Octopus.

E.On Next was singled out for having the worst performance by Ofgem. The watchdog found customers had, in some cases, been left waiting on the phone for hours. Meanwhile, its handling of complaints was also heavily criticised, with the regulator finding a high number of them went on to be upheld by the energy ombudsman.

Cathryn Scott, the director for enforcement and emerging issues at Ofgem, said the penalising of E.On Next demonstrated the regulator’s “determination to stand up for the rights of consumers and drive up standards”.

She said: “The very least that a customer should expect of their supplier is for them to pick up the phone to them in a timely way. The levels of service that we discovered at E.On Next during the period of review were unacceptable.

“As the energy regulator, our purpose is to protect energy consumers and this action serves as a reminder to all suppliers that they must ensure that their customers are able to contact them quickly and easily when they need to. This is particularly important during this time of volatile energy prices when many households are struggling with their bills.”

The fine E.On is having to pay will come to £5 million. Out of this pot, £4 million will go to E.On customers, while a further £1 million will go to Ofgem’s voluntary redress fund - a scheme that supports the country’s most vulnerable households, as well as research into new technology.

E.On was also told to immediately improve its call response rate. The provider says it was already in the process of improving its standards when the probe took place. It has now cut call waiting times to less than five minutes and also that fewer than 10% of the calls it receives are being dropped.

A spokesperson for the supplier said: “We won’t shy away from the fact that we weren’t at our best, but we’re heartened Ofgem recognises our efforts and our success in improving service levels even before this review began. We hit our agreed targets with Ofgem on day one and we’ve stayed there ever since.”