Energy UK believes that the move away from prescriptive licence conditions to a more principles-based approach could unleash innovation and improve customer outcomes. This blog is the first in a series examining the opportunities and challenges of moving towards a principles-based approach to regulating customer communications.
Communicating with customers should be simpler than regulation currently allows for. In our report we highlight six key things we feel a customer needs to know to get the benefits of engaging with the energy market:
- Pay for energy;
- Know where to seek assistance in relation to their energy;
- Complain if something goes wrong;
- Know what to do in an emergency;
- Find a deal to suit their characteristics and preferences; and,
- Be aware of and understand contractual obligations, rights, changes and events
We believe that Ofgem’s amended Standards of Conduct (SoC) and new Informed Choices principles provide a broad framework that offers sufficient regulatory oversight in relation to the six areas outlined above.
Our research and dialogue with stakeholders has revealed that the area of supplier to customer communications is a fast-changing and ever-evolving one. We feel that regulation must reflect this. Our work with energy suppliers and stakeholders has uncovered that regulation of customer communications has become too prescriptive, restricting both innovation and consumer choice. Channels of communication are likely to evolve over time with technology and customer preferences and a ‘one size fits all’ communication philosophy is no longer adequate.
The way customers interact with the market is evolving, and suppliers are responding to the demand for more flexible and innovative services and products. At the same time, new and different suppliers are entering the market, and transformative technology and industry system changes are being introduced.
Technology is developing fast and the rollout of smart meters and increasing use of smart phones open up new possibilities for engagement and communication with customers. It is important that the regulations governing customer communication in the energy market are fit for purpose not only for today but for the way in which the market and consumer behaviour may develop in future. Technological advances have already overtaken licence conditions governing customer communications. The licence conditions were drafted to encompass a paper-dominated communications environment but today many customers prefer to receive their communications electronically.
For these reasons Energy UK urges Ofgem to remove the majority of existing prescriptive licence conditions relating to customer communications.
The removal of more prescriptive licence conditions will require a shift to a new way of Ofgem monitoring compliance and carrying out enforcement. Suppliers will also have to find new ways of providing assurance. But these are hurdles that can be overcome and the prize is a modernised supplier licence that allows for clear and innovative communication with customers.
Natan Doron is the Head of Operational Policy in the Energy UK Retail Team and was one of the authors of ‘Rules of engagement: Putting customers at the heart of communications’ which was published in September 2017 .