Energy supplier Ovo is facing a substantial financial penalty after the industry regulator concluded it had left vulnerable customers exposed to potential harm.
Details of the Penalty
The Bristol-headquartered firm, which centres its offering around smart technology, green energy tariffs, and carbon-reduction targets, will pay £7m into Ofgem's voluntary redress fund. This fund is a mechanism through which companies that breach regulatory rules contribute to a central pot, either instead of, or alongside, standard fines.
In addition, Ovo will provide a £3.4m package of credit and debt relief for some of its most at-risk customers in lieu of direct compensation. This comes as the company is already in the process of paying £1.1m to customers in the Scottish Highlands and Islands, after a compliance review revealed that some rural customers lacked adequate access to engineer support between 2022 and 2024.
Ofgem's Statement
Cathryn Scott, director of market oversight and enforcement for Ofgem, said: "It is clear that Ovo fell short in its support of vulnerable pre-payment meter customers, and it's right that they've taken action to improve their processes."
Pre-payment meters (PPM) operate on a pay-as-you-go basis for utilities, whereby rather than settling energy costs through a monthly bill, customers pay upfront by loading credit onto a smart card, key, or via a smartphone app.
"Prepayment meters are a positive choice for many customers, helping them stay in control of their energy use and reporting high levels of satisfaction – but it's not suitable for everyone and strong monitoring must be in place to protect vulnerable consumers," Scott said.
Investigation Findings
The investigation centred on Ovo's handling of existing PPM customers, finding that the firm repeatedly failed to monitor and accurately log customer interactions, with evidence and key checks not always being carried out, as reported by City AM.
Ofgem warned these shortcomings "risked missing signs of vulnerability, leaving some customers exposed to harm". Regulators also flagged concerns over staff training materials, which were at times described as "unclear, inconsistent, and contained conflicting guidance".
Broader Context
A separate Market Compliance Review (MCR) examining conduct across the energy sector regarding PPM installations during 2022-23 resulted in some £73.6m being paid out in compensation by eight suppliers, including Ovo. Ovo has also contributed £11.9m to support vulnerable customers between 2022 and 2025, including donations to charity, free electric blankets and smart thermostats.
Ovo's Response
An Ovo spokesperson said: "Ofgem’s investigation examined how we supported prepayment meter customers between 2018 and 2024. We accept that some of our historic processes fell short of expected standards, and we are sorry for that."
"Keeping our customers safe and supported is hugely important to us and we recognise there were areas where we needed to do better. We have since worked to strengthen our policies and systems, including a new Safe and Reasonably Practicable (SARP) policy, strengthening how we identify and support our vulnerable customers. This settlement reflects both those historic issues and the improvements we have made."
Ovo said that customers who may be eligible for a "goodwill payment" will be contacted directly and do not need to take any action in response to the announcement.
