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Ofgem finally authorise Ovo Energy’s interest deal

Ofgem’s long running andovo energy increasingly bizarre dispute with Ovo Energy over their policy of offering interest of 3% on credit balances has finally been concluded.

Having previously ruled Ovo’s positive market move as inappropriate, Ofgem has undertaken a “derogation review” and has belatedly ruled that the policy does not increase complexity and is actually “beneficial to consumers”.

Not that any Ovo customers were complaining.

Reacting to Ofgem’s slow reaction to their innovative policy offering, Ovo Energy’s head of corporate affairs, Jessica Lennard said:

“Regulations should work in customers’ best interests, but it never felt right to us that the rules allow a supplier to charge interest when an account is in debit, but not reward customers when they are in credit.

“We set out to make the energy market a fairer, happier place for customers and the interest reward is something they have always told us is really important to them, so we were committed to fighting for it”

In their decision document, Ofgem said:

“We do not consider that the Interest Reward significantly increases complexity in consumer decision making. It is not directly linked to the unit rate and standing charge. Rather, we consider it as a form of compensation for consumers who end up with positive credit balances once they have paid their bills at the end of the month”

Indeed in 2014 Ovo Energy has paid out over £1.3 million in interest to nearly 350,000 customer accounts. In direct contrast other suppliers, according to Ofgem, have ‘sat’ on “hundreds of millions of pounds” of balances that they have failed to pass on to their customers.

To make their turn around more bizarre Ofgem’s about turn followed their praise for the Big 6 offering a potential route for customers to reclaim outstanding balances.

Philip Cullum, Consumer Partner at Ofgem said:

“Today’s launch of the My Energy Credit campaign is an encouraging step by the six largest energy companies to address Ofgem’s call to reunite former customers with their cash”.

Quite how or why belated, minimal action brought praise from the regulator whilst innovation and customer service did not is a question only Ofgem as usual can answer.