Customer protection changes locked in

Ofwat has issued its decision on revisions to the non-household retail market’s Customer Protection Code of Practice (CPCoP), to address the risk of customer harm and to further protect customer interests.

Many of the changes consulted on in July have been approved unchanged. These included:

• Principles – Ofwat is concerned the current ‘General Principles’ lack customer focus. It will rename them the ‘Principles of Retailer-Customer Interaction’. It has also proposed a new ‘Primary Principle’ be added concerning the customer interest, and new ‘Supporting Principles' of efficiency and proportionality. 

• Complaints – Retailers must increase the information they provide to customers about their rights to make complaints, how such complaints can be made and how they will be handled.

• Awareness and engagement – Retailers must promote the benefits of the market; provide greater support for customers who wish to switch, including by providing switching information on bills and websites; do more to resolve blocked switches; and provide a customer friendly version of the CPCoP to customers on sign-up.

Minor adjustments were made in other areas. These include:

• Vulnerability – Each retailer will be required to develop a 'vulnerability strategy' which sets out the processes it will use to identify vulnerable customers, what provisions it will put in place for them, and how it will monitor whether strategies are effective. Methods of identification and types of provision will be left to retailers, encouraging differentiation in service offering. Ofwat amended its definition of a vulnerable customer to be clear that vulnerability can be transient.

• Third Party Intermediaries (TPIs) – Retailers should only engage with TPIs who adhere to the CPCoP good practice principles, and cooperate with them willingly. Ofwat amended its proposals to better reflect the role of TPIs and ensure any commission or financial benefit a TPI incurs from interacting with a customer is transparently declared. 

• Prohibiting automatic contract renewals unless a customer consents, and prohibiting contracts from including termination notices or fees unless they are fixed-term – changes have allowed customers (who are not micro-businesses, where separate provisions apply) to agree to automatic contract renewal verbally, provided this is later confirmed by the retailer in writing and an audio recording of the agreement is retained. Another change concerned if a customer’s contract expired and neither a new contract nor automatic renewal has been agreed; the retailer can move the customer onto Retail Exit Code (REC) default terms or a contract which is more financially generous than REC terms. 

In addition, retailers have been allowed to extend the back-bill repayment period for micro-businesses at their discretion – to up to 24 months.

Finally, Ofwat will explore introducing an exemption clause to the CPCoP's requirement that retailers issue customers with one accurate bill per year based on a meter read where the property is metered. It explained: “We have concerns that some retailers may be unable to assure absolute compliance with this requirement. We plan to publish a change proposal in this area in the coming months.”

Implementation of the provisions will be staggered.