Customer Journey Workshop Group

Stakeholder briefing

24 July 2008

The Consumer Voice Policy

Paul BlandConsumer & 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 bodiesDTI/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 Direct

Redress Schemes

New National Consumer Council

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Consumer Voice: vision

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Enquiries/information

Resolving complaints

Regional accountabilityPolicy influencingResearchEducating consumers

FUNCTION CURRENT POSITION FUTURE STRUCTURE

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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 ClementsHead of Consumer Affairs

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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

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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

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Redress – Ofgem process

• Consultation Oct 07

• Decision February 08only approve a scheme if it complied with four core criteria:– Independence– Accessibility – Effectiveness– Public accountability

• Sought applications

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Redress - approval

• Received 1 application – tOSl

• Invited commentkey issues – Governance / fees / connections / performance

• tOSl scheme approved - conditional – BERR Order

• 1 October 2008

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Complaints handling standards - Approach

• Open minded

• Protection for consumers

• Competition

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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

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Consultation/visits

• Consultation November 07– Number of key elements– Industry: high level– Consumer groups: prescription

• Supplier visits – Variation in practices

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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

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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

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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

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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

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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

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Audit / Best practice review

• Consistent

• Embedded properly

• Consumer confidence

• 01/10/08

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Questions?

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 s75 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 newNCC

• newNCC Complaint Handling Model

• newNCC Interface with Advice Agencies

• energywatch & Postwatch Closedown and Changeover Plans

Neil AveryComplaints Lead

Consumer Direct

(Tier 1)

New consumer Contacts

InvestigatedComplaints to

Energy & Postal

Companies

ReferredEscalations

to Energy & Postal

Companies

new NCC(Tier 2)

Redress Scheme(Tier 2)

new NCC Interim Team

Resolved Enquires

Referred Complaints

Unresolved Complaints

Meeting Redress criteria

Other complaints &

Complex enquiries

Calls

Letters

Web Emails

Priority/Off Supply & Vulnerable consumers

Note: New NCC will also receive referrals from Redress Schemes, Regulators, Advice Agencies (Disconnections & Off Supply cases) & MPs

Price Comparison & other leaflets

newNCC’s Printing & Fulfilment contractor

Section 13: Duty to investigateDisconnection/threat of disconnection, refusal to reconnect supply Failure of a prepayment meter, system or payment facility

Section 12: Power to investigateComplaints made by or on behalf of a vulnerable consumerAct defines a vulnerable consumer defined as someone that it is not reasonable to expect to pursue the complaint themselvesIndustry 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 newNCC

Personal Circumstances (help required toresolve case)

High

Low

Urgency or Complexity of Issue

HighLow

Consumer Directresolves by advice

Consumer Directresolves by referral toescalated supplier team

Consumer Direct refers disconnection, off supply & other vulnerable cases to newNCC

Essential to ensure operational readiness for 1st 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 protocols to support referral pathways

Agree Complaint Handling Model with Industry

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

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)

Case types

Priority Cases (s13 Duties): Disconnection & PPM Off Supply

Vulnerable Cases (s12 Powers - Vulnerable Guidelines)

◦Investigated Complaints◦Empowered Complaints◦Enquiries◦Signpost/Referral to Energy Ombudsman

Other cases (mainly MPs)

Out of Scope Cases

newNCC

Contacts consumer andprovides 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)

newNCC

Contacts consumer to makesure agreed actions undertakenand consumer satisfied.

Closes case or escalates tosupplier if not resolved

Supplier

Arranges appointmentwith metering agent and/or takes appropriateaction. Provides updateto newNCC.

newNCC

•Customer call transferred from Consumer Direct orother agency •Establish facts, advise consumer & update Servicemail

•Telephone supplier, agree actions & request GSS orgoodwill payment (if appropriate)

Complaint Handling – Priority Cases

Complaint Handling – Vulnerable Cases

Stage 1

newNCC

•Receive case fromConsumer Direct or other agency & record inservicemail

•Initial Investigation •Email/telephone supplier

•Acknowledge to consumer In 2 working days

Supplier

Investigate and respondto consumer and newNCC within 10 working days

newNCC

•Receive and review response fromsupplier within 10 working days

•Discuss with consumer& close case or challenge supplier

Case closed

Stage 2 Stage 3

Targets (Investigated Complaints)• 75% of cases resolved in 35 working days• 95% of cases resolved in 66 working days

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◦newNCC and consumer unhappy with response from company

Out of Scope◦Consumer signposted to other advice agency because issue is outside newNCC’s remit

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.

newNCC 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 newNCC’s s13 duties for disconnection/off supply cases

Other micro business disconnection and off supply cases are within scope of newNCC’s s12 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.

Provision of support to enable advice agencies to deal directly with most vulnerable consumers (without need to refer to newNCC)

Access to consumer intelligence to support Company Performance and Campaigns activity

Direct referral of disconnection/off supply cases

Agree arrangements with Consumer Direct for transfer of other vulnerable cases

Training Materials and Training Delivery

Fact Sheets & Consumer Leaflets

Price Comparison Leaflets

newNCC Knowledge Base or Manual

Ask a Question facility

Ask the Advisor Telephone Service

newNCC’s Extra Help Unit

Feedback 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

Objectives

Seamless transition for consumers to new arrangements

Support go live of new arrangements from 1st

October

All consumers continue to received the help they need

Compliance with statutory obligations

Minimise work carried forward to newNCC

Agree Cutover Plan with stakeholders

Preparation for Cutover (June/July)

Set up Shadow Extra Help Unit and Interim Team in energywatch

Implement Cutover Plan on 4th August (new cases to call centre)

Call 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

JunePreparation of Call Centre Transition Training Plan

◦New Call Types◦New contact channels◦New complaint handling model◦Complex enquiries

JulyCall Centre Ramp Up Training Delivery for Transition Plan Consumer Direct Training commences (end July)

AugustAll new calls directed to call centre (complete by 11th August) Web, email & letters to call centre (complete by 18th August)Call centre handles new cases using transitional arrangements

June/JulyRoyal 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 exhaustedRoyal Mail’s interim Postal Review Panel goes live on 26th June to review all cases considered for deadlock

AugustPostwatch website amended to reflect transitional process and complaints form withdrawnRoyal Mail Postal Review Panel starts to refer cases to Redress Scheme

w/c 22nd SeptemberClosure of web and email contact channelsRedirect post from closing offices to Interim Team (25th)Residual live cases transferred to Interim Team (25th)Removal of IT equipment from closing offices (26th)Switch over postal calls to CD call centre (27th)Implement CD to newNCC referral process (29th)Telephone switchover to CD and new NCC (30th)Closure of energywatch & Postwatch web sites (30th)energywatch & Postwatch closed (30th)

From 1st OctoberAll telephone contacts to Consumer Direct (Energy & Post)Consumer Direct and newNCC websites livenewNCC Extra Help Unit and Interim Teams operational

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; 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; 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; originally comprising the six ERA member companies and an

independent Ombudsman Service Councillor, with the ERA CEO in the chair;

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 micro-business 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:- Businesses with fewer than 10 employees and/or less than €2M pa

turnover.

• However, other “proxy” indicators of micro-business status have been agreed or proposed:- annual spend of <£5,000 for each fuel; and/or annual consumption of < xxxxx kWh (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:- existing energywatch cases are being progressively transferred to the

EO, where there is no prospect of an immediate resolution; new complaints within our remit are being referred straight to us; 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:-

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

www.energy-ombudsman.org.uk

Questions ?