Retailers must have vulnerability strategies as part of business customer protection revamp

Ofwat is consulting until 23 August on its final proposals to revise 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 proposals are in line with its December 2023 consultation, including: 

• 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. 

• 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. 

• 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 ensure automatic contract renewals do not occur without explicit prior written customer consent. They must also provide a customer-friendly version of the CPCoP to customers on sign-up.

• TPIs – retailers should only engage with third party intermediaries who adhere to the CPCoP good practice principles, and cooperate with them willingly. 

• Compliance – retailers’ boards must provide an assurance statement of compliance with the CPCoP, and Ofwat will verify compliance through random sampling.

However, the regulator decided against pursuing other areas consulted on in December, based on feedback and practical constraints. These included: 

• Extending micro-business protections to all small businesses.

• Requiring retailers to collect information from customers to share with wholesalers in the event of an emergency or unplanned event. Ofwat said it remained concerned about this and had instead tasked the Retailer Wholesaler Group with looking at how information-sharing can be improved in unplanned and emergency events, with a view to developing an appropriate solution.

• Requiring retailers to issue at least two bills per year based on a meter read where the property is metered.

Ofwat already introduced housekeeping changes to the CPCoP, in January 2024.