Complaints are an increasing burden for non-domestic suppliers

Energy suppliers will need to offer enhanced complaints services to more than 200,000 small businesses under new Ofgem rules, BFY estimates.

The Complaints Handling Standards (CHS) are expanding from December 2024 to cover both micro and small businesses, and as volume increases, some will need to adapt more than others, to build the required maturity for higher demand.

There’s also an extra burden of more customers having access to the Ombudsman, if cases aren't resolved within eight weeks. So how can suppliers get ready for the changes ahead?

If you aren’t already operating a domestic complaints handling process, you’ll need to target change in three areas:

• People – Upskilling will be required to drive same day resolution, limiting additional effort and Ombudsman risk
• Process – This should feel slick, enabling customer engagement and upfront resolutions, to avoid aged complaints, process waste, and increased cost
• Governance – There’s more scrutiny coming from Ofgem, so your compliance and controls must be evidenced effectively

Suppliers who already operate a domestic process will face challenges of their own, stemming from the identification and integration of a new group of customers into the existing setup.

CHS Expansion – Who will be impacted most?

In their Non-domestic review, Ofgem said the “majority of stakeholders agreed with our minded-to position to expand the CHS to Small Business Consumers”, and that “Individual respondents and consumer groups generally agreed with our proposed implementation of 3 months”.

In our view, the suppliers supporting these timeframes are most likely those needing to scale their existing domestic complaint handling approach. Their primary challenge will be identifying the new group of businesses eligible for support, absorbing them into their existing setup, and being able to evidence this to Ofgem.

The very definition of a small business customer has been changed by the Government, and there's a critical need to accurately identify these customers based on their usage.

On the other hand, eleven suppliers considered the implementation period to be too short. This is likely those who’ve been solely B2B focussed, lacking the required complaints handling foundations and maturity for post-implementation.

Those suppliers must pivot to ensure they’re set-up for success, in order to avoid increased cost to serve, Ombudsman fees, and potential Ofgem penalties. This could mean equipping people with the skills and capability for effective complaints handling, alongside building the control framework and reporting to evidence their approach, when Ofgem inevitably request it.

Putting the right people in place

A significant amount of training and upskilling may be needed to ensure those managing the new, more complex, complaints procedure can meet Ofgem's expectations and standards. This is particularly true where experience of handling domestic complaints can’t be transferred.

With a more complex process, there’s a risk the complaints department becomes a resource drain. Suppliers may wish to invest time and resources into ringfencing teams, so regulations are met but wider complaints performance isn’t impacted.

It’s possible the new volume of complaints could also increase resolution time and will inevitably lead to increased cost and effort being expended across the operations of these suppliers.

With small businesses aware they can take their case to the Ombudsman after eight weeks, some may not accept resolutions early. Suppliers need to ensure all Ofgem expectations have been met, and appropriate resolutions have been offered within this timeframe to limit costs.

Process maturity gains a renewed importance

With the potential for more complaints from small business customers, root cause analysis with supporting remedial actions remains crucial to minimise volume.

For the complaints that do come through, suppliers may limit the number going to the Ombudsman through process efficiency and by improving their teams' capabilities. Suppliers should focus on ensuring their customer engagement processes are strong and that how the complaint will be considered resolved is agreed on day 1 to avoid delays and waste from not being able to get in touch with the customer.

Implementing change with urgency

Ofgem's overall aim with these new measures is to make the market fairer for small businesses, who’ve raised concern around the complexity of redress procedures and the lack of support available.

It’s clearly a positive change, but may leave alarm bells ringing in organisations who haven’t yet needed to invest in complaints handling maturity. And for those who are already more advanced in this area due to having a domestic customer base, there’s added uncertainty to navigate – as they look to identify and integrate small businesses into their existing complaints setup.

As the dust settles on Ofgem’s non-domestic review, how much change can suppliers deliver in the narrow timeframe given?

If you'd like more guidance on the upcoming changes to non-domestic complaints, contact Rachel Littlewood or Joseph Cooper.