Npower fined record £26m over customer service failures

Npower has been fined a record £26m by Ofgem over poor customer service and inaccurate bills.

The industry watchdog imposed the penalty as a result of billing issues, which affected more than 500,000 customers between September 2013 and December last year, reports The Telegraph.

Npower received more than two million complaints during that time as customers sought to question their bills, and “Npower failed to handle complaints effectively within a reasonable timeframe”, and chased debts that were in dispute, causing “distress and worry for many”, Ofgem said.

The cash will be paid back to the company’s worst-affected customers and some will be given to charity, Ofgem said today.

Npower’s customer service issues began four years ago, after the energy giant introduced a new IT system.

The new system sissued 500,000 late bills, with little or no detail on how the totals had been calculated.

“Npower failed its customers,” Dermot Nolan, Ofgem chief executive, said. “Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable.

“Npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.”

Simon Stacey, Npower’s managing director for domestic markets, said: “The last few years, since we changed the systems that support our domestic business, have been very disappointing for our customers – and for Npower.

“We are very sorry about what has happened and that is why we have agreed this significant package of customer redress.

“We’ve reduced complaints by nearly 70pc since the beginning of this year and as part of this package of measures with Ofgem, we have agreed targets for significant sustainable customer service improvement that everyone at Npower is working tirelessly to achieve.”

Npower has lost more than 300,000 customers in the UK and its profits have nosedived by 65pc since the issues began.

RWE, Npower’s German parent company, reported last month that Npower’s losses deepened to £111m in the first nine months of the year.

This is up from the £81m loss recorded during the same period in 2014.

Paul Massara stepped down as Npower chief executive “by mutual consent” in August after just two years at the business following the results.