Customer Journey Workshop Group Stakeholder briefing 24 July

Customer Journey Workshop Group Stakeholder briefing 24 July 2008

The Consumer Voice Policy Paul Bland Consumer & Competition Policy Directorate

Introduction • The new model for consumer representation: the “Consumer Voice” programme • The new National Consumer Council • Redress Schemes • Complaint handling standards

Government… • is committed to a robust and effective consumer and competition regime; • one which is fair to consumers as well as business. • Key to success of competitive markets are the confident, empowered consumers who drive them

2004 review of sectoral consumer bodies DTI/HM Treasury report found: • Crucial and effective positive influence by sectoral consumer bodies on regulators and companies. • Significant positive results for consumers which would not otherwise have been achieved. • Scope for consumer bodies to have even closer, more effective, engagement with regulators, companies, Government, and EU. • High proportion of annual budget spent on complaint handling (Energywatch 41%, Postwatch 18% in 2003/4) • Need for regulated service providers to take much more direct responsibility for handling complaints effectively.

Rationale for change • Consumers confused about where to go for help. • No single, coherent voice for the consumer • Sectoral consumer bodies do not have powers to enforce resolution. • Need to incentivise companies to deal effectively with complaints.

Consumer Voice: vision CURRENT POSITION FUTURE STRUCTURE Redress Schemes Regional accountability Policy influencing Research Educating consumers Consumer body 3 Resolving complaints Consumer body 2 Consumer Direct Consumer body 1 Enquiries/ information New National Consumer Council Complete and timely information flows FUNCTION

Consumers, Estate Agents and Redress Act 2007 Main “Consumer Voice” provisions: • New National Consumer Council, with key functions: – Representation – Research – Information – Powers of investigation – Specific support for vulnerable consumers • New complaint handling standards for gas, electricity and postal services providers; • New statutory redress schemes for gas, electricity and postal services.

Strengthen and streamline consumer advocacy (New NCC) • • A new body with critical mass Even more effective Able to take cross-cutting view in the regulated sectors Benefit from experiences in other regulated sectors Opportunity for more specialists Closer engagement with Government, regulators, business, EU More effective engagement with consumers

Scope of the redress schemes Gas and electricity: • domestic consumers • micro-enterprises (usage up to £ 5, 000 equivalent; or up to 10 employees or turnover up to € 2 million)

Redress schemes: process • Secretary of State determines the scope of the scheme • Regulated service providers submit scheme to the regulator for approval • Regulator approves the scheme according to criteria in the Act • Secretary of State makes an Order requiring regulated providers to be members of the redress scheme

Questions ?

Redress schemes & Complaints handling standards Marcus Clements Head of Consumer Affairs

New redress schemes • Redress schemes can require members to provide to the complainant: – An apology or explanation – Payment of compensation – Other action in the interest of the complainant • Redress schemes are a back-stop, not a “complaint handling” service 14

Redress - approach • Effective back-stop for consumers’ complaints • Ensure incentives on suppliers to handle complaints effectively are maximised • Consider and consult on best practice principles • Take into account what we learn from our review of the Energy Supply Ombudsman 15

Redress – Ofgem process • Consultation Oct 07 • Decision February 08 only approve a scheme if it complied with four core criteria: – Independence – Accessibility – Effectiveness – Public accountability • Sought applications 16

Redress - approval • Received 1 application – t. OSl • Invited comment key issues – Governance / fees / connections / performance • t. OSl scheme approved - conditional – BERR Order • 1 October 2008 17

Complaints handling standards - Approach • Open minded • Protection for consumers • Competition 18

Research Six events to: • Understand experiences/what is valued/what regulation is expected/ would poor service prompt switching Findings • Wide ranging concerns: accessibility, helpfulness, updating, timeliness, resolution • Speed v quality • Ofgem role – transparency of process and timeliness • Complaints experience contributes to decision making • Performance data 19

Consultation/visits • Consultation November 07 – Number of key elements – Industry: high level – Consumer groups: prescription • Supplier visits – Variation in practices 20

Decision - Elements of the Standard • Decision April – Regulations published 1 July • Common definition of a complaint – Currently no common standard on what is a complaint – Basis on which to compare performance • Requirement to record complaints at the point of contact – Level playing field – Record of complaint if contact again – Clock ticking for redress 21

Decision - Elements of the Standard • Requirement to have and signpost a complaints procedure – Accessibility / transparency / escalation / redress • Requirement to signpost the redress scheme – Deadlock – Time limit 22

Decision - Elements of the Standard • Requirement to make arrangements for handling referrals from new NCC / Consumer Direct • New NCC – Expect suppliers to deal effectively with all customers – Vulnerable customers may turn to new NCC for assistance – Contact point for new NCC would give extra protection • Consumer Direct – Build upon energywatch’s empowerment process – Make arrangements for referrals 23

Decision - Elements of the Standard • Requirement to deal with complaints efficiently and timely – Allocate and maintain resource • Publish information on complaints – Annually – Unresolved day +1 • Ofgem to consider what information to collect • NCC – information gathering power / duty to publish 24

Decision - Elements of the Standard • Networks complaints – Same obligations (not complaints) – Not a competitive market • Micro business complaints – Same obligations (not complaints) – Protection v costs/burden 25

Audit / Best practice review • Consistent • Embedded properly • Consumer confidence • 01/10/08 26

Questions? 27

Consumer Direct Northampton Tom Ballard Consumer Voice Operations Project Officer

CDN Set Up • Expecting circa 400, 000 contacts for both energy and post • CDN will have around 60 advisors • A new CHS system will be used, IC-Connect • A transitional manager acting as Ops Team contact for the transition of CDN into live environment • Training material completed for training to start in August

Tactical Solution Update • Progressing transitional work with CDN implementation team • Working with Consumer Focus on referral routes and working level instructions • Agreeing referral routes with smaller companies • This will also be rolled out to Network Companies • Engaging with the Ombudsman service

Referrals to Companies • Model based on current CD TSS referrals • In most circumstances, case will be sent via email with agreed response times • If the consumer is unhappy with this process, the call will be transferred via a warm mid call transfer • Agreement from companies to answer within an agreed time • Developing individual company protocols • Feedback mechanisms to ensure quality referrals

Urgent / Vulnerable Cases • Process for referring urgent cases to Consumer Focus supplier e. g. off supply or threat of disconnection • Vulnerable definition has been agreed • Complex cases can be deemed to constitute vulnerable cases • Consumer Focus will have an Extra Help Unit based in Glasgow who will deal with these cases • A dedicated team in Bournemouth will provide technical support and deal with pre-existing cases – potentially for six months

Training • 3 week programme accredited by Trading Standards Institute • Energy and post modules reviewed by Ofgem and Postcomm for technical accuracy • Abridged legal module to include SOGA, SOGSA, distance and doorstep selling and s 75 CCA • End of programme exam and assessed calls • Internal Quality Monitoring Officers to monitor

Data Collection • Set of codes has been developed to record types of issues CD are advising on • Developed by CD, EW, Consumer Focus and Ofgem • Input from Industry and ERA • CD will record what action was needed, e. g. Advice Given, Referral • Reviewed after 3 months • Possibility of Companies receiving high level reports on these issues

Questions ?

• Customer Journey and role of new. NCC • • • new. NCC Complaint Handling Model new. NCC Interface with Advice Agencies energywatch & Postwatch Closedown and Changeover Plans Neil Avery Complaints Lead

Consumer Voice: Contact Model Resolved Enquires New consumer Contacts Referred Escalations to Energy & Postal Companies Referred Complaints Calls Unresolved Complaints Letters Web Emails Consumer Direct (Tier 1) Meeting Redress criteria Priority/Off Supply & Vulnerable consumers Other complaints & Complex enquiries Price Comparison & other leaflets Redress Scheme (Tier 2) new NCC Interim Team Investigated Complaints to Energy & Postal Companies new. NCC’s Printing & Fulfilment contractor Note: New NCC will also receive referrals from Redress Schemes, Regulators, Advice Agencies (Disconnections & Off Supply cases) & MPs

Complaints - CEAR Act Duties & Powers Section 13: Duty to investigate Disconnection/threat of disconnection, refusal to reconnect supply Failure of a prepayment meter, system or payment facility Section 12: Power to investigate Complaints made by or on behalf of a vulnerable consumer Act defines a vulnerable consumer defined as someone that it is not reasonable to expect to pursue the complaint themselves Industry has agreed that a consumer will be treated as vulnerable if they are unable to understand or act on the advice given due to: ◦The urgency of the issue and/or ◦Their personal circumstances and/or ◦The complexity of the issue and/or Detailed guidelines prepared to identify the cases falling within this definition which will be referred by Consumer Direct to new. NCC

Referral of vulnerable consumers High Personal Circumstances (help required to resolve case) Low Consumer Direct refers disconnection, off supply & other vulnerable cases to new. NCC Consumer Direct resolves by referral to escalated supplier team Consumer Direct resolves by advice Low High Urgency or Complexity of Issue

new. NCC Complaint Handling Essential to ensure operational readiness for 1 st October ◦Key area of reputational risk (avoid Terminal 5 scenario) ◦Retain some extra capacity and contingency for transitional period ◦Minimise changes required to systems/processes during transition Extra Help Unit ◦Largely resourced from energywatch Glasgow staff ◦Majority of workload will be energy cases ◦Use energywatch service mail system ◦Adapt energywatch complaint handling processes ◦Research on needs and service preferences of vulnerable consumers Agreed Vulnerable definition Establish Agree protocols to support referral pathways Complaint Handling Model with Industry

Role of Extra Help Unit Referrals of Vulnerable energy cases from Consumer Direct, Ofgem and Redress Scheme Referrals of Disconnection cases from Consumer Direct, Ofgem and Advice Agencies Referrals of Vulnerable postal cases from Consumer Direct, Postcomm and Redress Scheme Referrals from MPs Provision of support and information to Advice Agencies

Interim Team (Oct 2008 to March 2009) Clear residual live energy cases (postal cases handled in Belfast) Handle follow up contacts on cases closed in previous quarter Support Extra Help Unit on vulnerable cases (until EHU is fully staffed) Receive, sort/scan letters (until redirected to Consumer Direct) Forward new non vulnerable cases to Consumer Direct and Network Change consultation responses to Belfast Forward vulnerable cases to Extra Help Unit Provide back up advice to Consumer Direct on complex enquiries Support Call Centre on any non vulnerable cases which cannot be resolved by empowerment and are out of scope for Redress Scheme Handle any High Level/MP cases (until migrated to Extra Help Unit)

new. NCC Complaint Handling Case types Priority Cases (s 13 Duties): Disconnection & PPM Off Supply Vulnerable Guidelines) Cases (s 12 Powers - Vulnerable ◦Investigated Complaints ◦Empowered Complaints ◦Enquiries ◦Signpost/Referral to Energy Ombudsman Other Out cases (mainly MPs) of Scope Cases

Complaint Handling – Priority Cases new. NCC Supplier • Customer call transferred from Consumer Direct or other agency • Establish facts, advise consumer & update Servicemail Arranges appointment with metering agent and/or takes appropriate action. Provides update to new. NCC. • Telephone supplier, agree actions & request GSS or goodwill payment (if appropriate) new. NCC Contacts consumer to make sure agreed actions undertaken and consumer satisfied. Closes case or escalates to supplier if not resolved new. NCC Contacts consumer and provides update Definition: Priority cases are disconnections, threatened disconnections or prepayment off supply cases. Targets: 95% of cases resolved by next working day. Consumer’s supply restored within 3 or 4 hours (per Guaranteed Standards)

Complaint Handling – Vulnerable Cases Stage 1 Stage 2 Stage 3 new. NCC • Receive case from Consumer Direct or other agency & record in servicemail • Initial Investigation • Email/telephone supplier Supplier new. NCC Investigate and respond to consumer and new. NCC within 10 working days • Receive and review response from supplier within 10 working days • Discuss with consumer & close case or challenge supplier • Acknowledge to consumer In 2 working days Targets (Investigated Complaints) • 75% of cases resolved in 35 working days • 95% of cases resolved in 66 working days Case closed

new. NCC Complaint Handling Empowered Complaints (Mid Call Transfer or Email) ◦Vulnerable consumer referred by Consumer Direct but now able to deal directly with Company Enquiries (Target: Resolve 95% in 10 working days) ◦Consumer not dealt with supplier but unable to do so ◦Information required from previous supplier to resolve a complaint Signpost or Referral to Energy Ombudsman ◦new. NCC and consumer unhappy with response from company Out of Scope ◦Consumer signposted to other advice agency because issue is outside new. NCC’s remit

Complaints Workload and Resources Forecast Cases Transition 6 months (forecast) Steady State 2009/10 (forecast) Cases handled 14, 000 16, 000 Extra Help Unit & Interim Team (FTE) 37. 5 15. 5 Notes: 1. Transition resource includes provision for handling 2000 non vulnerable cases, support for Consumer Direct, handling redirected correspondence, work on residual energy/post cases & contingency provision 2. Resources include management, supervision and administrative support, but excludes support for advice agencies and responses to web questions.

Business Consumers new. NCC Board has agreed that the Extra Help Unit will handle referrals of: ◦Vulnerable micro businesses from Consumer Direct ◦Micro business disconnection and off supply cases from Consumer Direct and other agencies Sole traders are within scope of new. NCC’s s 13 duties for disconnection/off supply cases Other micro business disconnection and off supply cases are within scope of new. NCC’s s 12 powers for helping vulnerable consumers Number of cases from vulnerable business consumers is expected to be small and most cases should be resolved by the Energy Ombudsman.

External Interfaces Provision of support to enable advice agencies to deal directly with most vulnerable consumers (without need to refer to new. NCC) Access to consumer intelligence to support Company Performance and Campaigns activity Direct Agree referral of disconnection/off supply cases arrangements with Consumer Direct for transfer of other vulnerable cases

Support to Advice Agencies Training Fact Materials and Training Delivery Sheets & Consumer Leaflets Price Comparison Leaflets new. NCC Knowledge Base or Manual Ask a Question facility Ask the Advisor Telephone Service

Sources of Consumer Intelligence new. NCC’s Feedback Extra Help Unit of consumer issues (via web portal) Representation on Stakeholder Forums Complaints Information from Ofgem/Companies Complaints Information from Consumer Direct Complaints Information from Redress Scheme Web sources

Closedown & Changeover Plans Objectives Seamless transition for consumers to new arrangements Support go live of new arrangements from 1 st October All consumers continue to received the help they need Compliance with statutory obligations Minimise work carried forward to new. NCC

Transitional Arrangements Agree Cutover Plan with stakeholders Preparation Set for Cutover (June/July) up Shadow Extra Help Unit and Interim Team in energywatch Implement Call Cutover Plan on 4 th August (new cases to call centre) centre resolves cases using agreed transition arrangements: ◦Providing Advice and Information ◦Empowerment referral to supplier ◦Signpost to redress or other agency ◦Referral to Shadow Extra Help Unit (vulnerable only) ◦Referral to Shadow Interim Team ◦Transfer to other energywatch offices (existing cases only) Closing energywatch offices focus on clearing live case load

Energy Transition Timetable (1) June Preparation of Call Centre Transition Training Plan ◦New Call Types ◦New contact channels ◦New complaint handling model ◦Complex enquiries July Call Centre Ramp Up Training Delivery for Transition Plan Consumer Direct Training commences (end July) August All new calls directed to call centre (complete by 11 th August) Web, email & letters to call centre (complete by 18 th August) Call centre handles new cases using transitional arrangements

Postal Transition Timetable (2) June/July Royal Mail remove strapline reference to Postwatch on responses to complaints letters (except for final responses) Postwatch call centre refer consumers to postal operator’s internal escalation process where appropriate Postwatch CST continue to handle urgent/vulnerable cases and cases where escalation has failed or been exhausted Royal Mail’s interim Postal Review Panel goes live on 26 th June to review all cases considered for deadlock August Postwatch website amended to reflect transitional process and complaints form withdrawn Royal Mail Postal Review Panel starts to refer cases to Redress Scheme

Changeover Timetable (3) w/c 22 nd September Closure of web and email contact channels Redirect post from closing offices to Interim Team (25 th) Residual live cases transferred to Interim Team (25 th) Removal of IT equipment from closing offices (26 th) Switch over postal calls to CD call centre (27 th) Implement CD to new. NCC referral process (29 th) Telephone switchover to CD and new NCC (30 th) Closure of energywatch & Postwatch web sites (30 th) energywatch & Postwatch closed (30 th) From 1 st October All telephone contacts to Consumer Direct (Energy & Post) Consumer Direct and new. NCC websites live new. NCC Extra Help Unit and Interim Teams operational

Questions ?

Readiness for 1 October 2008 Richard Sills Ombudsman

An Ombudsman is not… • A regulator • A consumer advocate • A consumer advisor • An emergency helpline

Background to the Energy Ombudsman Service • • • 2005: - Ofgem determined (following the energywatch billing supercomplaint) that the major energy suppliers (the ERA Members) should establish a scheme to resolve outstanding billing disputes in a fair and independent way. The Energy Retail Association committed to establishing an ADR scheme within 12 months. 1 July 2006: - Voluntary scheme established as the Energy Supply Ombudsman Service; Ø dealing with complaints about billing and transfers made by customers of ERA members. • • 1 September 2007: - extended to cover selling. 1 April 2008: - the Energy Supply Ombudsman Service became the Energy Ombudsman; Ø Terms of reference extended to reflect the requirements of the CEAR Act 2007. • • April 2008: - first Network Companies joined. June 2008: - “Conditional Approval” from Ofgem (subject to ratification by BERR).

Preparations for 1 October 2008 (1) Structure & Governance • The Energy Member Board has been working since July 2006; Ø originally comprising the six ERA member companies and an independent Ombudsman Service Councillor, with the ERA CEO in the chair; Ø extended membership is/will be: § § § 3 representatives from the major suppliers; 1 representative from the smaller suppliers; 1 representative from the network providers; 1 representative from the Energy Retail Association; 1 independent representative from the Council. • Terms of Reference have been altered to incorporate the extension of the scheme’s scope to both domestic/residential and microbusiness complaints

Preparations for 1 October 2008 (2) Scope of the Scheme • The Energy Ombudsman Scheme has been dealing with domestic and residential complaints about billing, transfers (July 2006) and sales/marketing (September 2007). • CEAR requires the inclusion of complaints from micro-businesses, which are defined in EU legislation as: Ø Businesses with fewer than 10 employees and/or less than € 2 M pa turnover. • However, other “proxy” indicators of micro-business status have been agreed or proposed: Ø annual spend of <£ 5, 000 for each fuel; and/or Ø annual consumption of < xxxxx k. Wh (to be agreed).

Preparations for 1 October 2008 (3) Signposting the Scheme • All of the six major companies now refer to the Energy Ombudsman on the backs of their bills and provide details for consumers to contact us. • When the smaller suppliers join, we will discuss consumer signposting with them and Ofgem. • As distributors and networks do not send bills to consumers, we will ask them to signpost consumers at the earliest appropriate point.

Preparations for 1 October 2008 (4) Consumer Referrals • In the short-term, there are/will be referrals from energywatch: Ø existing energywatch cases are being progressively transferred to the EO, where there is no prospect of an immediate resolution; Ø new complaints within our remit are being referred straight to us; Ø however, we do not know how many complaints are “in the pipeline”. • For the longer-term (after energywatch’s absorption in the new NCC), we will liaise with Consumer Direct and NCC to ensure that consumers have the correct information, are referred to us when appropriate and that we re-direct our premature contacts to the relevant company or agency. • We will be working closely about (potentially) vulnerable consumers with the new NCC.

Preparations for 1 October 2008 (5) Acceptance of Complaints from Consumers • The Energy Ombudsman Service can accept a complaint for investigation within SIX months of the issue of a deadlock letter or NINE months from the initial complaint to the service supplier, provided that a minimum period has elapsed for the company to have had a reasonable opportunity to resolve the dispute. • At the start of the scheme, that minimum period was 12 weeks after the consumer’s first complaint to the service provider. • On 1 January 2008, the minimum period was reduced to 8 weeks. • However, when the smaller suppliers join, they will have a “run-in” of a year in which the minimum period for a consumer to complain to the EO will be 12 weeks (the criteria in the top bullet remain the same).

Finance • No public funds involved, the service is funded by its members; • Costs are met by a combination of subscription and case fee; • The proportion is set by the Member Board; • Subscription has been set for 2008/9 at £ 100 for small members; • The 2008/9 case fee is £ 325 for all members.

In Summary We have prepared for CEAR by: • altering our governance and structure to facilitate: Ø the Act’s requirements: § the extension in scope to both domestic and micro-businesses; and § wider membership from energy suppliers and distributors • working with our members to ensure good and consistent signposting for consumers • liaising with Consumer Direct and the new NCC to ensure more effective and efficient future referrals • providing smaller suppliers with a “run-in” period

Questions ? www. energy-ombudsman. org. uk