Consumer redress orders
Ofgem is empowered to make consumer redress orders which may be used to provide an alternative to lengthy and expensive litigation and benefit all consumers, whether they are aware they have suffered loss or not.1s144 and Sch 14 EA 2013 An order may require a supplier to provide redress to you directly, compensating you directly where possible or putting you back into the position you were in before the breach. Ofgem may make a consumer redress order where it is satisfied that a supplier is contravening any condition or requirement and one or more consumers have suffered loss, damage or been caused inconvenience.2s27G (1)(b) EA 2013 A loss need not be financial to qualify, so inconvenience or nuisance may be a possible ground. Under a consumer redress order, a supplier may be ordered to:3s27H (1)(a)-(c) EA 2013 •pay compensation to each affected consumer for the loss, damage or contravention;
•issue a written statement setting out the contravention and its consequences;
•terminate or vary any contracts entered into with affected consumers. This can only happen with your consent.
If compensation is part of the order, the amount must be specified.
Ofgem does not have a prescribed set of penalties; it approaches each complaint on a case-by-case basis to retain the widest discretion.4Ofgem, Financial penalties and consumer redress policy statement, 6 November 2014 The amount of compensation must be reasonable. The maximum amount of penalty that may be imposed on a regulated supplier may not exceed 10 per cent of its annual turnover. The powers are designed to be proportionate and build upon the power to impose penalties and the role of the Ombudsman. Consumer redress orders may be used together with, or separately from, penalties.5Ofgem, The gas and electricity markets authority’s statement of policy with respect to financial penalties and consumer redress under the Gas Act and the Electricity Act, para 1.4, 31 March 2014