Sovereign Network Homes (202127215)

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REPORT

COMPLAINT 202127215

Network Homes Limited

26 January 2023

 

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:
    1. The resident’s enquiries about service charges for communal electricity.
    2. The resident’s complaint.

Background

  1. The resident occupies a flat in a block of 18 properties under the terms of a Lease Agreement. It is agreed that the landlord is responsible for communal lighting in that block and is entitled to pass the electricity cost on to those residents in equal shares. The resident has lived in his flat for more than 20 years and reports that the yearly cost of this facility has typically been around £25 per flat per year. However, in early October 2020, when the resident received his Service Charge Certificate for financial year 1 April 2019 – 31 March 2020, the estimated amount of £19.56 was replaced with an actual amount of £747.22 (per flat). This meant that an expected bill, for the block, of approximately £350 in total, was being claimed at almost £13,500.
  2. The resident queried the position with the landlord, who in turn, contacted its energy management contractor who manages its utilities and liaises with the relevant energy supplier. Ultimately, the landlord attended site and provided photographs of up to date meter readings which it submitted to its contractor to investigate whether a misreading had taken place.
  3. However, by mid-June 2021 the situation had not been resolved and the resident complained about the landlord’s handling of the issue. He considered the landlord had had enough time to investigate the readings and he was concerned that the invoice from the energy supplier had been approved and paid without anyone noticing the discrepancy or questioning it in the first place. The resident was concerned that there was a lack of urgency on the landlord’s part and that it had failed to recognise the impact on him of having the debt hanging over him. The resident reported suffering from anxiety and the uncertainty about the situation was causing him worry and distress.
  4. The landlord confirmed it was waiting to hear the outcome of its contractor’s investigations. It anticipated there had been a misreading of a meter and it was expecting to receive a credit note at some point. It maintained, however, that it was correct to include the invoice in the service charge accounts as a genuine item of expenditure for the block. The landlord accepted that it had no system in place to flag up unusual invoices but was looking to put in place “failsafe measures” in future.  It explained that payment was managed by its contractor and it did not see expenditure until it was included in the accounts some 6 – 18 months after it was incurred. The landlord stated the issue may not be finally settled until September 2022 when the accounts would ultimately be settled.
  5. The landlord asserted it had kept residents updated on the situation and advised that they could arrange with its income team to withhold payment for that part of the service charges whilst the sum was in dispute. The landlord asserted that any delay was not of its making – it was waiting for its contractor to resolve the issue. However, in its Stage 2 response of 26 July 2021, it offered the resident £100 compensation for his time and trouble in pursuing the issue.
  6. The resident expressed disappointment that the matter could take that long to resolve but accepted the compensation offered. However, he referred the matter to this Service when he received estimated service charge accounts for April 22 – March 23 and found the electricity charge had been estimated based on the large invoice which was still in dispute. The resident reported finding it hard to cope with the prospect of these debts and the landlord’s lack of motivation to resolve the situation.

Assessment and findings

Scope of Investigation

  1. Before assessing this complaint, it is necessary to clarify the extent of our investigation of the issues raised by the resident. In accordance with Paragraph 42(e) of the Housing Ombudsman Scheme, this Service cannot consider complaints about the level of service charges or the amount of any increase. Such issues can be referred to the First Tier Tribunal (Property Chamber). However, we can consider the way in which a landlord has administered the resident’s service charge account. This would include looking at the quality of the information provided to the resident, whether the accounts contain errors, and any delays in providing information about charges.

The resident’s enquiries about service charges for communal electricity

  1. The resident’s initial contact with the landlord about the electricity charge is not evidenced but it is reasonable to conclude it was in around October 2020 shortly after the Service Charge Certificate was received by him. He also stated in his correspondence to the landlord that he had initially queried the charge by phone in October 2020.
  2. In early December 2020 the landlord contacted its contractor, noting the bill was “extremely high for this sort of block” and was advised to take photographs of the meter readings at the site for the contractor to then forward to the energy supplier. However, on 5 March 2021 the landlord emailed the resident confirming this had not yet been done but it would be attending to it shortly.
  3. Between then and mid-June 2021 various emails passed between landlord and contractor when the fact that the site was on different tariffs for different times of day was discussed along with the need to evidence readings from three separate screens on the meter. It was not until 15 June 2021 that the landlord provided the correct photographic evidence to its contractor in the format that was required.
  4. It is noted that these events took place during the COVID-19 pandemic when restrictions were being imposed and lifted, depending upon the progression of that situation. Whilst that may account for some of the delay in obtaining the necessary evidence/meter readings, it did take longer than might reasonably have been expected for the landlord to iron out with the contractor exactly what was required and to attend the site at all. The evidence reflects the lack of urgency/impetus referred to by the resident.
  5. At the end of June 2021, the landlord pressed its contractor for an update on its presentation of this evidence to the energy supplier and on 12 July 2021 the latter confirmed an updated bill based on the readings was to be produced by the energy supplier the next day. However, by 27 July 2021 the landlord had received a further bill for the block for the year after the one which is the subject of this complaint, and it was once again high at £11,000. The landlord was concerned that this might point to “foul play” regarding consumption or there being an issue with the meters themselves. The landlord chased its contractor for the amended bill which was to be based on the actual readings it had taken.
  6. There then followed various discussions about whether bills were based on estimated or actual readings, when actual readings had taken place, and whether the energy supplier had significantly underestimated usage – with a ‘catching up’ now becoming apparent. In August 2021 the landlord questioned its contractor as to why it had no system to detect the discrepancies and had simply paid the invoices. In September 2021 the landlord asked for historic charges to be looked at to see how they compared to the current consumption.
  7. It can be confirmed therefore that the landlord was investigating the situation albeit belatedly – these later enquiries were not dependent on receipt of another high bill and might reasonably have been directed at the contractor much sooner in the history of this issue. There is then no evidence of a resolution and in March 2022 the resident received estimated service charges for a forthcoming service charge year based on the previous figures. He reasonably reports his dismay at the prospect of the block paying a combined figure of £30,000 for two years’ of electricity to provide communal lighting on stairwells. However, as stated above, this Service cannot make any findings on whether the level of those charges is/was accurate, fair or reasonable.
  8. Given there is evidence that the landlord suspected “foul play” regarding consumption at the site, the Ombudsman would reasonably have expected to see it explore this option further – for example by testing the meters at the site. For example, this could have been done by turning off all relevant appliances and seeing whether the meter was still recording ongoing use. Further, the landlord might have employed an expert to examine the operation of the meters. The landlord took no further action to check the meters were running appropriately which represented a service failing on its behalf and a recommendation will be made that it do so, has this not taken place since.
  9. The overall pace of the landlord’s enquiries was inappropriate. In its complaint response the landlord accepted some delay but blamed this on its contractor and stated it was not at fault. However, for this Service’s purposes the landlord retains responsibility for the actions of its contractors and the lack of progress and impetus therefore represented service failings on the landlord’s behalf.
  10. However, the landlord did mitigate the position by giving residents the option of not paying the disputed charges whilst it investigated which was appropriate and so the debt was not enforced against the resident. This did not prevent him from reporting anxiety over the issue but, other than resolve it with a substantial credit note and introduce procedures to identify atypical bills, there was little else the landlord could have offered in the circumstances.
  11. It is reasonable to conclude that had the resident not pushed the landlord for a conclusion, its investigation might have faltered further than it did. The consequence of the landlord’s delay can be seen in the disputed sum then being used to base future estimates on – because the issue had not been resolved by the time those charges were drawn up. The resident has raised this with the landlord and that will be considered further below.
  12. The landlord offered the resident compensation for his time and trouble of £100 – the resident reports chasing the landlord numerous times. The landlord had reassured the resident at a relatively early stage that it considered the bill to be an error and it agreed not to enforce payment. Accordingly, the landlord might reasonably have expected its actions, intended to ensure the resident experienced no financial loss, to offer support and comfort to the resident. However, in the Ombudsman’s view, this resident was especially sensitive to the situation given his propensity to anxiety, whereas it is reasonable to conclude that other residents, faced with the same problem, may have been reassured by the landlord’s actions. The Ombudsman does not seek to detract from the resident’s experience of events but considers that the level of compensation was appropriate when considered on an objective, rather than subjective, basis.

The resident’s complaint

  1. The landlord operates a Complaints Policy which sets out a two stage approach to complaints. Stage one involves complaints being acknowledged within five working days of receipt with a response within 10 working days. Residents then have 30 days to escalate their complaint to stage two if they remain dissatisfied. In this case the landlord then commits to providing a response within 20 working days.
  2. The resident raised the possibility of making a complaint with the landlord on 1 May 2021 and on 7 May 2021 it responded that if he wished to do so, he could send a specific email confirming that was the case. On 18 May 2021 the resident emailed the landlord again, setting out a full history of the case and asking whether there was “a customer complaints route I can pursue to try to get this distressing issue resolved”.
  3. Rather than take these communications as a complaint, the landlord replied on 20 May 2021 that a complaint would only look at delays but would not provide information and asked whether the resident still wanted to complain. On 23 May 2021 the resident emailed the landlord referring to his complaint being “progressed” and on 14 June 2021 he asked it to “re-raise this complaint”.
  4. In the Ombudsman’s view, it was reasonably clear to the landlord from the outset of this series of communications that the resident wished to complain but it was trying to steer the resident away from doing so. This left the resident having to repeat himself to be heard.
  5. The landlord accepted the complaint as being made on 15 June 2021 when the final communication was received. The landlord did not acknowledge it, as provided for in its policy, but it did provide its stage one response in ten working days (28 June 2021). The resident made an escalation request the same day which was responded to with a stage two response on 26 July 2021 – that is on the 20th working day.
  6. Whilst the landlord met the time limits provided for in its policy for its responses, it failed to log the complaint as such to begin with and then failed to acknowledge it. This was not in accordance with its policy nor in line with good practice including this Service’s Complaint Handling Code of the time which states “Landlords should not unreasonably refuse to escalate a complaint through all stages of the complaints procedure and must have clear and valid reasons for taking that course of action”. It represented a service failing on its behalf. The landlord might reasonably have been expected to acknowledge this to the resident and offer compensation in recognition of the impact upon him. An order has been made below for compensation of £50.
  7. Eight months after the stage two response was given, the resident contacted the landlord’s complaints team again under the reference number of his complaint. He had received the estimated charges for a forthcoming service charge year, 2022-23, which were based on the doubted invoice. The landlord declined to deal with this as part of the complaint, referred the resident to its relevant team and pointed out the time for resolving the 2019-20 accounts had not yet expired.
  8. The landlord’s decision to use a doubted invoice upon which to base future estimates was not an issue included in the original complaint – that event had not happened at that stage. In the Ombudsman’s view, the landlord was entitled to decline to treat it as part of that complaint. It was entitled to refer the resident back to its relevant team to raise the issue.
  9. However, the landlord might reasonably have pointed out to the resident that he could make a fresh and separate complaint about the decision to calculate the figures on this basis. Nevertheless, the Ombudsman’s approach is that landlords are entitled to try to ‘get it right’ before they face investigating whether they have ‘got it wrong’. The landlord’s complaint policy states that “we ask customers to get in touch with us as soon as something has gone wrong and give us the opportunity to put it right”. A finding of service failure will not therefore be made for this omission at this stage. A recommendation will be made, however, that the landlord review its processes for basing projected service charges on disputed actual figures.

Determination

The resident’s enquiries about service charges for communal electricity

  1. In accordance with paragraph 53(b) of the Housing Ombudsman Scheme the landlord has offered reasonable redress in respect of its handling of the resident’s enquiries about service charges for communal electricity.

The resident’s complaint

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its handling of the resident’s complaint.

Orders and recommendations

Orders

  1. The landlord should pay the resident compensation of £50 in recognition of the impact on him of its complaint handling failures.
  2. It should confirm with this Service that it has complied with the Order within four weeks of receiving this determination.

Recommendations

  1. The landlord should consider investigating whether the meter at the resident’s block is working correctly (if it has not already done so).
  2. The landlord should consider reviewing its processes for basing projected service charges on disputed actual figures (if it has not already done so).
  3. The landlord should register a new formal complaint if the resident notifies it that he remains dissatisfied with its decision to calculate the estimated communal electricity charge for 2022-23 from a disputed invoice.