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April 26, 2016updated 05 Sep 2016 10:48am

£200m IT system upgrade lands Scottish Power huge fine over customer service failings

News: Big six energy provider received over one million customer complaints between June 2013 and December 2015.

By Ellie Burns

IT system failings have led to Scottish Power being handed a £18m fine by Ofgem, with the regulator finding that the energy provider failed to provide a basic level of customer service.

The regulator found that Scottish Power, one of the big six energy providers, failed to protect customers from serious problems arising from the implementation of a new IT system – problems which resulted in over one million customer complaints between June 2013 and December 2015. Ofgem found call handling, complaint resolution and billing to be inadequate, with customers failing to be treated fairly by the energy provider.

Neil Clitheroe, ScottishPower’s CEO of Energy Retail and Generation, blamed the ‘complex’ implementation of a new IT system for the subpar customer service, saying:

"In order to upgrade our old IT systems, we invested £200 million on new technology to allow us to deliver smarter digital products and services to benefit our customers. During the complex transition between systems we encountered a range of technical issues. This lead to an unacceptable increase in complaints and reduced the quality of our customer service."

However, speaking on BBC Radio 4’s Today programme, Dermot Nolan, Ofgem’s chief exec, said that it was ‘Scottish Power’s "requirement to get the IT right. If they produce poor quality service I frankly don’t care why."

The Ofgem investigation found that many customers experienced unacceptably long call waiting times with many calling multiple times and hanging up before getting through. Thousands of Ombudsman rulings were not implemented within the required 28 days, in addition to over 300,000 customers receiving late final bills. This meant some customers did not promptly receive money they were owed.

Clitheroe was quick to reassure Scottish Power’s 3.2 million customers that the technical issues affecting the new IT systems had now been resolved and that customers will soon be able to reap the benefits of the upgraded system. He said:

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"With our new IT system now fully in place, our service performance has significantly improved and customers will start to see real benefits in managing their accounts. Newly developed digital services have been launched, such as online payment adjustments and refunds, which would not have been possible on our old system."

Since opening the investigation into Scottish Power, Ofgem has seen significant improvements to the energy provider’s customer service – average call waiting time, rate of abandoned calls and the number of Ombudsman cases have all more than halved. The number of late bills has also fallen by 75%.

The £18m fine will be paid to customers who were affected by the customer service issues (up to £15m), with the remainder going to charity. Nolan said that the large fine "sends a strong message to all energy companies about the importance of treating consumers well at all times, including while new systems are put in place."

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