Ovo Energy has agreed to pay out more than £10 million after regulator Ofgem found that vulnerable customers were left at a "risk of harm" due to the supplier's inadequate monitoring of households using prepayment meters. The energy watchdog stated that Ovo's oversight of prepayment meter customers, including those on the priority services register, was insufficient, leading to breaches of rules designed to protect customers in vulnerable situations.
Details of the Settlement
Ovo has agreed to a settlement that includes a £7 million payment to Ofgem's voluntary redress fund and a £3.4 million package of credit and debt relief for some of its most vulnerable customers. Ofgem confirmed this package is in lieu of compensation. This comes just weeks after German rival E.On agreed to acquire Ovo in a deal that will create Britain's largest electricity supplier.
Ofgem's Findings
Cathryn Scott, director of market oversight and enforcement for Ofgem, said: "It is clear that Ovo fell short in its support of vulnerable prepayment meter customers and it's right that they've taken action to improve their processes. As a result of our investigation, vulnerable customers will receive debt write-off or credit payments alongside a payment into our voluntary redress fund." She added that prepayment meters are a positive choice for many customers but require strong monitoring to protect vulnerable consumers.
Additional Payouts and Past Issues
Ovo is also paying out another £1.1 million to customers in the Scottish Highlands and Islands after Ofgem found that Ovo failed to offer adequate engineer support to rural households for more than two years, from January 2022 to April 2024. This follows an earlier order in January for Ovo to pay £2.77 million in compensation after nearly 12,000 vulnerable customers experienced lengthy delays in receiving their warm home discount support. Of those affected, 7,726 were on the priority services register, and 4,066 were classed as medically vulnerable.
Regulatory Crackdown on Prepayment Meters
The latest payout is part of a broader crackdown by the regulator on the prepayment meter market. Last month, British Gas agreed to a £20 million payout and to compensate customers who had a prepayment meter installed without their permission. Ofgem stressed that the investigation into Ovo was focused on its processes and treatment of prepayment meter customers, rather than the forced installation of meters.
Ovo's Failures and Remedial Actions
Ofgem's investigation found that Ovo failed consistently to monitor and accurately record customer interactions, with evidence showing that key checks and safeguards were not always carried out. These gaps in oversight risked missing signs of vulnerability, leaving some customers exposed to harm. The regulator also identified issues with staff training materials, which were at times unclear, inconsistent, and contained conflicting guidance.
Ovo has since strengthened its policies and systems, including implementing a new policy to identify and support vulnerable customers. An Ovo spokesperson said: "We accept that some of our historic processes fell short of expected standards and we are sorry for that. Keeping our customers safe and supported is hugely important to us, and we recognise there were areas where we needed to do better."
