Southern Housing (202324573)

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REPORT

COMPLAINT 202324573

Southern Housing Group Limited

24 October 2024

 

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

  1. The complaint is about the landlord’s handling of the resident’s request for clarification regarding a backdated increase in energy charges.
  2. The Ombudsman has also investigated the landlord’s complaint handling.

Background

  1. The resident has been a shared owner of the property, a 1-bedroom ground floor flat, since 2016. The landlord is a housing association and the freeholder of the block.
  2. The resident’s block is served by a heat network operated by the landlord. It employs a billing agent, which invoices residents for their metered usage.
  3. On 27 March 2023, the landlord wrote to all residents to inform them their energy charges would be increasing from 26 April 2023. It said the tariff increase came into effect from 26 April (no year given) which meant residents had been undercharged since October (no year given) when the new wholesale gas prices were obtained. The undercharge would be calculated as the difference between the old and new tariff and standing charge against each resident’s personal energy consumption between 1 October 2022 and 31 March 2023.
  4. The billing agent wrote to the resident on 27 May 2023 detailing the new charges. It said that as the charges should have been applied from 1 October 2022, it was calculating the amount as a shortfall for the period from 1 October 2022 to 31 March 2023. This would be added as a debt to residents’ meters no later than 31 May 2023. The debt would be applied with a recovery rate of 20% (ie for every £10 topped up, £2 would go toward paying off the debt). If the resident had any queries, they could contact the support team at the billing agent.
  5. The resident emailed the billing agent on 30 May 2023. They raised the following questions:
    1. The letter detailed the tariff charges effective from 26 April 2023 as a standing charge of 62p per day and unit rate of +0.19p per kilowatt hour (kWh). Correspondence from the landlord on 27 March 2023 detailed the new tariff charges as a standing charge of 56.057p per day and a unit rate of +21.273 per kWh. They asked the billing agent to clarify which of the 2 was correct.
    2. The same letter indicated their account had a debt of £292.26 due to the increased charges. No breakdown of the debt was provided. They asked for a breakdown to show how the figure had been calculated, including the different component parts that it was made up of.
    3. They were aware of the government’s Energy Bill Support Scheme (EBRS) and asked how this was calculated and included in their bill.
  6. On 30 May 2023, the billing agent told the resident it understood their concerns and advised they contact the landlord for support on the matter. The resident forwarded their concerns to the landlord the same day.
  7. The landlord responded to the resident on 6 June 2023. It explained that it did not operate its heat networks for profit. It said the price of energy had significantly increased during the period in question. At that time it was paying the additional costs that had yet to be passed to residents as its own supplier had not yet issued it with a bill.
  8. On 7 June 2023, the resident emailed the landlord asking the same questions they had put to the billing agent in the email on 30 May 2023.
  9. On 30 June 2023, the resident wrote to the landlord to make a complaint. They advised they had still not received a response to the queries they had repeated in their email of 7 June 2023. They said they were deeply concerned about the landlord’s actions and communication in the matter. They requested that the matter was escalated and a response provided to their questions.
  10. The resident emailed again on 2 October 2023 to say they had still not received a response. They asked the landlord to provide them with a case reference number even if it was unwilling to respond.
  11. The landlord wrote to the resident on 12 October 2023, forwarding an email from its billing agent with information and tariff details to answer their questions. These were:
    1. Rate per kWh – £0.202601
    2. Standing charge – £0.560572

The billing agent advised that these tariffs matched what the landlord had sent to the resident except for the consumption charge. The billing agent also asked if it could see the letter the landlord had sent to the resident as it may have been sent to the wrong network.

  1. The resident emailed the landlord on 18 October 2023. They did not feel the answers it had provided satisfied their queries. They said that the email from the billing agent had included a third tariff that was different to the 2 previous ones they had been given. They said they found the information provided extremely confusing. They were concerned that the landlord was unable to explain how a debt they were being asked to pay had been calculated. They noted that they had asked for a breakdown of the figure, which had not been provided.
  2. Following a request from the Ombudsman on 18 October 2023, the landlord issued its stage 1 response on 25 October 2023. It included the following points:
    1. It understood the resident wanted it to provide a breakdown and clarity on the changes to the energy tariff and the accrued debt of £292.26.
    2. The resident’s property had a communal heating system. The landlord obtained the gas and set the tariff. The bills were issued by a billing agent for heating and hot water and paid for through a pre-payment meter.
    3. In March 2023 it wrote to residents advising that it needed to apply a backdated heating charge because of volatile market conditions and billing from its supplier. The breakdown of the charge was detailed as follows:
      1. Heat consumption from October 2022 to March 2023 (kWh): 1,787
      2. Additional unit charge: £241
      3. Additional fixed charge: £50.37
      4. Total additional charges: £292.26
      5. EBRS discount: -£16.62
      6. Total to be paid: £275.64
    4. It regretted the need to apply the backdated charge and was taking steps to stop this happening again. These included:
      1. Committing to improving the communication and service it provided.
      2. Changing the billing agent and conducting a tariff review on 1 December 2023.
      3. Refurbishing the heating network to improve its efficiency.
      4. Writing to residents separately about the planned works to the heating system and to confirm the details of the new billing agent.
    5. Its compensation policy allowed for discretionary offers where its service was not of the level expected. It offered £50 comprised of:
      1. £25 for the time it had taken to respond to the complaint.
      2. £25 for having to pursue the complaint to get a response.
  3. The resident escalated their complaint on 26 October 2023. They said:
    1. While the landlord had not provided the breakdown of the debt they had expected, the information provided explained how the debt was calculated. They considered that aspect resolved.
    2. They were not satisfied with the information provided on the tariff changes. They had been given 3 different figures by the landlord and its billing agent.
    3. They wanted to know:
      1. The actual charges for their property, including the standing charge and rate per kWh, as well as the changes to those charges and the time periods of the changes. They believed there should be no change after the new tariff was introduced.
      2. Why they had been given the 3 different tariff values and what the landlord was doing to prevent this happening again.
  4. The landlord issued its stage 2 response on 14 November 2023. It said:
    1. The current tariff details as addressed in its stage 1 response were applied in May 2023 and had been backdated to October 2022. These were:
      1. Rate per kWh – 21.273p
      2. Standing charge – 56.06p
    2. The tariff for December 2023 to March 2024 had also been updated. Further information would be provided by its new billing operator. These were:
      1. Rate per kWh – 19.29p
      2. Standing charge – 33.10p
    3. It appreciated the disruption caused by the steep rise in tariffs and apologised for the inconvenience.
    4. The global energy crises and volatility in the market prevented its suppliers from providing accurate prices, which had made it impossible for it to set accurate tariffs.
    5. It had appointed a new billing agent which would provide a new welcome pack and phone that week with further details.

Assessment and findings

Scope of the investigation

  1. The resident’s complaint includes concerns about the level of a back-billed debt that had been applied to their energy meter. They sought information about how the kWh tariff had been calculated when they made a complaint to the landlord in June 2022. It is not for this Service to decide on the reasonableness of the charge itself, but it is within our jurisdiction to consider how the landlord responded to the resident’s enquiries.

The landlords handling of the resident’s request for clarification regarding the backdated increase in energy charges

  1. Regulation 9 of the Heat Network (Metering and Billing) Regulations 2014 (‘the Regulations’) explains that heat suppliers must:
    1. Ensure that bills and billing information are accurate, refer to actual consumption, and are compliant with the requirements of Schedule 2, including:
      1. Current energy prices.
      2. Information about the final customer’s energy consumption.
    2. Provide a clear explanation of the information contained in a bill, including how the bill was calculated and specifying fixed and variable charges.
    3. Ensure that information and estimates of energy costs are provided to a final customer promptly where requested.
  2. This Service empathises with the resident and the concerns they raised over an increase in their energy charges. Although this case relates to events that took place over a year ago, it is relevant to note that the continuing rise in the cost of energy may cause stress and financial concerns to many households. It is acknowledged that rising energy costs are outside the landlord’s control. However, it is responsible for communicating key information clearly, in a timely manner, and responding appropriately to any concerns or queries raised.
  3. The landlord informed the Ombudsman and the resident that it procures the gas for the property and sets the tariff. This statement confirms that it held the relevant information to be able to answer the resident’s query.
  4. In its first correspondence on 27 March 2023, the landlord notified residents that price rises would be taking place in one month’s time. The evidence indicates the landlord was aware that energy prices were increasing before this letter. While it may not have had the specific tariff details at this point, it would have been reasonable to inform residents of the forthcoming increases at the earliest opportunity. This was especially important given the prices were to be backdated resulting in a debt. Early notification would have allowed those affected to plan financially.
  5. The landlord’s letter on 27 March 2023 contained the appropriate tariff information. However, the letter was not clear. It said: “Your tariff increase will come into effect from 26th April [which] means you have been undercharged since October when our new wholesale gas prices were obtained.” Firstly, the reference to months without a year present was unhelpful and confusing. Secondly, the statement read that the rate came into effect in April, which suggested the charges applied from April onward and not before as the landlord stated. The Regulations require bills to have a clear explanation on charges, but the landlord’s letter failed to deliver this.
  6. The billing agent’s letter on 27 May 2023 listed the previous and current tariffs and standing charges (different to those detailed in the landlord’s letter) and listed the debt as a whole. However, it did not break the debt down or explain what it was made up of. This was an additional failure to provide a clear explanation as required by the Regulations. The letter advised residents to contact the agent’s support team with any queries. The resident did contact the support team. However, despite being responsible for calculating the charges the team advised the resident to contact the landlord. The landlord’s response indicated that it did not operate its heat network for profit. It said that the price of energy had increased significantly and that it was presently covering the increased costs. The response was unhelpful and failed to answer any of the points that had been raised.
  7. The resident contacted the landlord again with the same questions on 7 June 2023 but it did not respond. They asked for their request to be escalated on 30 June 2023, but again it did not respond. The resident made a further attempt on 2 October 2023, which the landlord responded to on 10 October 2023. It was unacceptable that it took the landlord 4 months to provide a response. The Ombudsman expects landlords to have in place, apply and monitor their own communication key performance indicators, to ensure residents are responded to as required. This helps to deliver clear, effective and timely communication, which is essential to a productive landlord and tenant relationship.
  8. In its response to the resident on 10 October 2023 the landlord replicated an email it had received from its billing agent on the same day. Unhelpfully, this introduced a different tariff to the 2 that had previously been communicated to the resident. The billing agent also asked the landlord if it could obtain the letter sent to the resident as it was possible they had received the wrong information. However, there is no evidence that the landlord followed up on this request, which was unacceptable.
  9. In its stage 1 and 2 responses the landlord again failed to provide clarification on the reason it had supplied different tariff and standing charge amounts for the same billing period. The evidence demonstrated it had asked the billing agent about the tariff when the landlord should have been in possession of this information itself. We would have expected it to have been able to respond fully to the resident with the correct information after their first request in May 2023. The differing responses and poor communication caused the resident frustration and a loss of confidence in the landlord’s ability to diligently administer their heating charges, undermining the relationship. Overall, the landlord’s communication regarding the tariff changes was unclear and confusing. It is the Ombudsman’s opinion that the landlord’s responses did not provide a clear explanation and were not provided promptly as required by the Regulations. Its handling of the resident’s request for information about the backdated energy charges therefore amounts to maladministration.

The landlords response to the residents complaint

  1. When investigating a complaint, the Ombudsman applies our Dispute Resolution Principles to be fair, put things right and learn from outcomes.
  2. The landlord has a 2-stage complaints process. It has adopted the definition of a complaint in line with that of the Housing Ombudsman Complaint Handling Code (‘the Code’) in place in 2022 at the time of the complaint: “an expression of dissatisfaction, however made … about the standard of service… or those acting on its behalf”.
  3. At stage 1 the landlord commits to acknowledging complaints within 5 working days and responding within 10 working days from the date of its acknowledgement letter. At stage 2 it will acknowledge an escalation request within 5 working days. Stage 2 reviews are held by a panel. However, the procedure at the time did not detail the time period for holding a review. This failed to comply with the Code. The landlord has now addressed this issue, therefore no order has been made in relation to this point. Complainants can choose whether to have a panel made up of the landlord’s staff and a resident member or its staff only. The response will be provided within 20 working days from the date of the escalation acknowledgement letter.
  4. The resident’s email to the landlord on 30 June 2023 stated that their questions had not been answered, that they were “deeply concerned with the landlord’s actions and communication”, and that they wanted their request escalated. In line with the Code this was an expression of dissatisfaction, which the landlord should have accepted as a complaint. However, it did not raise a complaint or respond until requested to do so by the Ombudsman. This left the resident feeling frustrated and unheard. Not accepting the complaint was a failure to comply with the Code and the landlord’s own policy.
  5. The landlord’s stage 1 response detailed information that it had already provided to the resident. Unhelpfully, it did not clarify or explain the reason for the differing tariff and standing charge amounts, which the resident had repeatedly requested. It offered £50 compensation associated with its failure to accept the complaint and the time taken to respond. As required by the Code it did not detail whether it upheld the complaint. The omissions from the stage 1 response constituted a missed chance to resolve the complaint at the earliest opportunity.
  6. The landlord’s stage 2 response also failed to answer the resident’s specific question and the reason for their complaint. It referred to the tariff details it had supplied in its stage 1 response. This was incorrect. While the stage 1 response did provide a breakdown of the debt, it did not include any tariff details, which was frustrating for the resident. It was also unreasonable that the landlord again did not clarify whether it upheld the complaint.
  7. Through its complaint responses the landlord demonstrated that it had not learned from its earlier failures in this case. While it was right to offer compensation, the amount offered was insufficient. This, coupled with the landlord’s initial failure to log a complaint, and to clarify whether it upheld the complaint, shows that it did not put things right or resolve the resident’s complaint. This has led to a finding of maladministration in the landlord’s complaint handling.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in the landlord’s handling of the resident’s request for clarification regarding the backdated increase in energy charges.
  2. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in the landlord’s complaint handling.

Orders and recommendations

Orders

  1. Within 4 weeks from the date of this report the landlord must:
    1. Provide a written apology from a senior manager to the resident for the failures identified in this report. The apology must meet the criteria highlighted in the Ombudsman’s apologies guidance.
    2. Pay the resident £350. The money must be paid directly to the resident and not offset against arrears. This replaces the landlord’s previous offer of £50 (less any amount already paid by the landlord as part of its previous offer). It is comprised of:
      1. £200 for the distress, inconvenience, time and trouble associated with the landlord’s handling of the resident’s request for clarification regarding the backdated increase in energy tariffs.
      2. £150 for the distress, inconvenience, time and trouble associated with the landlord’s complaint handling.
    3. Provide evidence of compliance with the above orders.